BoJ adds further stimulus measures just

The JPY collapses to a seven- year low as the Nikkei trades close to up 5% on the day. The BoJ surprised the market by announcing further stimulus measures in an effort to achieve the 2% inflation target, but the approval was a close call as four of the nine board members voted against the move. The GPIF also announced changes to the allocation of the Japanese pension fund.

BoJ additional stimulus measures

–    Increase the monetary base to JPY 80 trillion a year versus the current pace of JPY 60-70 trillion.

–    Increase its JGB holding to JPY 80 trillion a year versus JPY 50 trillion now

–    Extend the average remaining maturity of JGB purchases to 7 years-10 years

–    Increase annual ETF purchases to JPY 3 trillion (from JPY 1trillion currently) and annual J-REIT purchases to JPY 90 billion (from JPY 30 billion currently)

GPIF reallocation to Japanese pension funds

–    Fund to raise its holding of domestic stocks to 25% of its portfolio from a current 12%

–    Fund to lower the weight of Japanese government bonds to 35% from a current level of around 60%

The BoJ, as expected, downgraded growth and CPI forecasts which are now more in line with market estimates.

- BOJ SEES FY2014 CORE CPI AT +1.2%; JULY FORECAST WAS +1.3%

- BOJ SEES FY2015 CORE CPI AT +1.7%; JULY FORECAST WAS +1.9%

- BOJ SEES FY2016 CORE CPI AT +2.1%; JULY FORECAST WAS +2.1%

- BANK OF JAPAN CPI FORECASTS EXCLUDE EFFECT OF SALES-TAX RISES

- BOJ SEES FY2014 REAL GDP AT +0.5%; JULY FORECAST WAS +1.0%

- BOJ SEES FY2015 REAL GDP AT +1.5%; JULY FORECAST WAS +1.5%

- BOJ SEES FY2016 REAL GDP AT +1.2%; JULY FORECAST WAS +1.3%

In Europe today, the focus is on the CPI for October, consumer spending reports from France and Germany. In the US, we get September personal income and spending, the core PCE deflator, and October Chicago PMI.  In Canada, August GDP is released.

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