Bank of Japan with new phase of monetary easing

The Bank of Japan announced during Asian trading hours today that it would enter into a new phase of monetary easing. Haruhiko Kuroda, the central bank's new governor, said the BoJ would aggressively purchase long-term government bonds over the next two years to provide liquidity and obliterate deflation. He further said they were targeting to achieve 2 percent inflation in two years' time. Although additional quantitative easing had been expected, the dimension of the announced purchases came as a surprise.

The JPY slumped immediately after the announcement of the BoJ's bold move: USD/JPY traded 2.7 percent higher at ¥95.42, GBP/JPY was at ¥143.85, and EUR/JPY traded at ¥122.05. Right now, there is some profit-taking, but I expect the yen to follow its trend of steady depreciation in the foreseeable future, unless other central banks decide to counter by launching monetary easing programs of their own.