BoJ increases ETF purchasing in latest monetary easing move

Jul 29th, 2016 | By | Category: ETF and Index News

The Bank of Japan’s Monetary Policy Meeting (MPM) today saw its Policy Board announce, by majority vote, that it would increase its exchange-traded fund purchasing program in a bid to expand stimulus.

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Bank of Japan increases its ETF purchasing programme to boost stimulus

A note from the meeting stated that there would be: “An increase in purchases of ETFs by a 7-2 majority vote….The Bank will purchase ETFs so that their amount outstanding will increase at an annual pace of about 6tn yen.” (Roughly $58bn, which is almost double the previous pace of about 3.3tn yen).

According to Reuters, BOJ Governor Haruhiko Kuroda said the bank was conducting the review not because its policy tools had been exhausted but to come up with better ways to achieve its 2% target – keeping alive expectations of further monetary easing.

Other measures taken by the central bank include increasing the size of its lending program to support growth in U.S. dollars to $24bn (about 2.5tn yen; double the previous size of $1bn).

However, other assets will continue to be purchased at the existing rate. The note from the Bank stated: “With regard to the guideline for money market operations, the guidelines for asset purchases except for ETF purchases, and the policy rate, the Bank decided to leave these unchanged.”

Japan’s ETF market has boomed in recent months  with assets invested in ETF listed in Japan hitting a record high of $148bn at the end of June, according to date from ETF consultancy, ETFGI.  YTD Japan has seen net inflows of $16.50bn, which is made up of equity ETFs which saw the largest flows YTD at $14.24bn, followed by fixed income at $41m. These were offset by outflows from commodity ETFs of $21m.

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