Thursday, 20 September 2012

Bank of Japan expands monetary stimulus as Japanese exports fall

Monetary policy easing from the world's major central banks continued on Wednesday.

This time, it was the Bank of Japan expanding its asset-purchasing fund by 10 trillion yen to 80 trillion yen. Interest rates were kept at between zero and 0.1 percent.

Thursday brought some justification for the latest easing. Japanese exports fell 5.8 percent in August from a year earlier and imports fell 5.4 percent. The trade balance came to a deficit of 754.1 billion yen in August, the second straight month that it has been in deficit.

Japan's trade could be impaired further by souring relations with China over a territorial dispute.

Meanwhile, China's economy is facing problems of its own. A report on Wednesday showed that foreign direct investment in China fell 1.4 percent in August from a year earlier.

While Asia's two biggest economies show signs of weakening, the US economy appears to be supported by the continuing recovery in housing. Existing home sales rose 7.8 percent in August to the highest rate since May 2010. Also, housing starts rose 2.3 percent in August. However, building permits fell 1.0 percent.

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