Soon the markets will be able to taste a Quantitative easing in Japanese sauce. Bank of Japan Governor Masaaki Shirakawa said his institution would pursue a "strong quantitative easing policy." able to give a boost to the growth of the country. Shirikawa is determined to fight deflation to reach the 1% inflation target and acknowledges that "the Japanese economy faces a critical challenge to return to a sustainable pace of growth with price stability." Finally, the governor urged his collaborators to pay close attention so that the euro area debt crisis is not transmitted to Japan through the channels of the financial markets.
The Japanese central bank's decision on how to handle the situation will be taken at its next meeting on April 27. During the last meeting, which ended yesterday, a member of the board had proposed new quantitative easing measures, through the purchase of an additional 5 trillion yen of assets - after the increase announced surprisingly in February. But the proposal was rejected.
Meanwhile, the yen is confirmed as a safe haven on the currency market. While the euro and the dollar have stabilized, thanks to the measures of the ECB and the Fed, the yen continues to appreciate. After the Bank of Japan's decision not to opt for quantitative easing, thus avoiding being overwhelmed by market pressures, the Japanese currency hit a one-month high against the euro and the dollar. But after yesterday's publication of the latest Fed bulletin, which shows a slight recovery in the US, the yen weakened against the US currency, a sign that perhaps investors are starting to prefer the dollar again to the yen.
