Source CNBC
The Bank of Japan surprised markets by increasing its purchases of exchange-traded funds (ETFs) by 300 billion yen annually, in addition to its current plan to increase the monetary base by 80 trillion yen a year.
After the decision, the Nikkei erased early losses, tacking on 1.4 percent, while the dollar rose against the yen, fetching 123.11 yen, compared with around 122.40 yen before the decision.
The new ETF purchase program will begin in April and is in addition to the current ETF purchase program of around 3 trillion yen annually.
The BOJ said it plans to use the program to purchase ETFs of stocks issued by firms "proactively" investing in physical and human capital, starting with purchases of ETFs tracking the JPX-Nikkei Index 400. The program is aimed in part at offsetting the possible market impact of the BOJ's sales of stock it has purchased from financial institutions since 2002, the BOJ statement said. It plans to take 10 years to sell those shares at a pace of around 300 billion yen annually.
The BOJ also said it would change the average maturity of its Japan government bond (JGB) purchases to 7-12 years next year from around 7-10 years at the end of this year.
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