BoJ withdraws some of its emergency programs

Following the lead of the US, the Bank of Japan has joined in reversing some of the measures it presented in order to calm the markets down during the crisis and provide liquidity where it was necessary.  This isn’t, however, a complete reversal.  BoJ is in fact still extending an important loan program.

In a bitter public dispute over the past few weeks, the government has pressed the Bank of Japan to continue buying corporate debt and to maintain other measures that the central bank argued were no longer necessary because credit markets had largely recovered from the global financial crisis.

“The government should not tell the B.O.J. what to do, but the B.O.J. instead needs to take the government’s stance into consideration,” Finance Minister Hirohisa Fujii said after the central bank’s policy meeting Friday. “I think the BOJ is doing that today.”

It’s scary because between the US and Japan, although the latter has exited the recession earlier than the US, Japan I believe is still the weaker economy.  Then you have the UK which is still considering expanding its QE program.  A highly deflationary environment and a strong yen make some measures still necessary.  I’m no economist so I’m interested to see what will happen.

Source: NYT

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