BOJ Leaves Rates Unchanged, But Increases QE (FXY)

The Bank of Japan left the key target rate unchanged at 10 basis points, but appeared to bow to government pressure and increased the size of the three-month loan facility arranged last December to JPY20 trillion from JPY10 trillion.

Tweaking this facility was widely tipped as a likely compromise formation between the BOJ who has argued that monetary policy was already extraordinarily easy and interest rates were extremely low, while the government wants more efforts to combat deflation. Nevertheless, the compromise was not satisfactory and two BOJ members (Noda and Suda) dissented.

The Yen (NYSE: FXY) decreased slightly, but is unlikely to affected in the long run.