The Bank of Japan, which met earlier today for an emergency session, voted to increase the purchase of shares from Japan's struggling banks, but stopped well short of taking the radical anti-deflation measures some had expected. The measures agreed upon fall far short of the 'unorthodox' measures that many have been calling for, and seem to cast rather a long shadow over the speculation that Fukui would be more radical than expected.
The central bank voted 7-2 to expand a scheme to buy shares from commercial banks to Y3,000bn from the previous Y2,000bn limit. It also said it would provide as much liquidity as the markets needed to counter any turbulence generated by the war in Iraq. Markets, which had stayed relatively firm in the morning session in spite of falls on Wall Street overnight, were disappointed. The Nikkei stock average, which has rallied over recent days, fell sharply on the BoJ announcement, closing down 2.3 per cent to close at 8,238.76. "These are just small steps within the current monetary framework," said Nobuyuki Nakahara, a former BoJ board member who advocates more radical anti-deflationary measures. "They do not represent the fundamental changes of policy that Japan needs."