BOJ Decision To Cut Rates, Launch Latest QE Round Sends Gold To Fresh All Time Record Over $1,327
As Zero Hedge speculated yesterday, as a conclusion to its two-day meeting the BOJ has decided to aggressively engage in competitive devaluation of the Yen (for the nth time in a row). Specifically, Shirakawa's impotent henchmen cut interest rates and pledged to keep rates at zero until prices are seen stable in what Reuters cited was "a surprise move showing its concern that a strong yen and slowing growth are undermining a fragile economic recovery." Luckily this move was not at all surprising to ZH readers. And, as we further expected, "the central bank also decided to set up, as a temporary measure, a 35 trillion yen ($419 billion) pool of funds to buy or accept as collateral assets such as government bonds, commercial paper and asset-backed securities." And to those who think Bernanke will allow Japan to engage in QE1002 without the US doing a little dollar debauchery of its own, we have some California real estate with just modestly fake title deeds to sell. Of course, none of this matter on a relative basis, as it will be followed merely by more devaluations elsewhere, but on an absolute basis it merely sent gold to a fresh all time high over $1,327. We hope that even gold's staunchest critics start seeing the pattern at this point...
More from Reuters
The decision to cut interest interest rates was made by a unanimous vote,
But board member Miyako Suda opposed including government bonds among the type of assets the BOJ could buy using its pool of funds.
Governor Masaaki Shirakawa will hold an embargoed news conference, with his comments expected to come out sometime after 4:15 p.m. (0715 GMT).
The BOJ had kept interest rates at 0.1 percent since late 2008. In the wake of sharp gains in the yen it eased monetary policy last December by setting up a facility offering cheap funds to banks, which was expanded in March and in August.
Here is how the market accepted the decision - note the all time high.