New BoJ governor fires opening salvo in war on deflation

Japan's policy makers seem determined to end deflation, with the Bank of Japan today launching a renewed offensive against it. Bloomberg reports:

Bank of Japan Governor Haruhiko Kuroda began his campaign to end 15 years of falling prices by doubling monthly bond purchases in a bid to reach 2 percent inflation in two years.

With Kuroda presiding over his first meeting, the board today temporarily suspended a cap on some bond holdings and dropped a limit on the maturities of debt it buys. The BOJ will purchase 7 trillion yen ($74 billion) of bonds a month along with more risk assets, the central bank said in Tokyo.

Elsewhere, the case for further monetary easing appears mixed based on Wednesday's economic reports.

In the euro area, a report on Wednesday showed that inflation slowed to 1.7 percent in March from 1.8 percent in February.

In the US, the Institute for Supply Management reported on Wednesday that its non-manufacturing index fell to 54.4 in March from a one-year high of 56.0 in February. ADP reported that private employment rose by 158,000 last month, down from a 237,000 gain the prior month and the smallest increase since October.

On a more positive note, China reported on Wednesday that its official non-manufacturing PMI rose to 55.6 in March from 54.5 in February while HSBC reported that its services index for China rose to 54.3 from 52.1.