BOJ to extend bond buying maturities

BOJ to extend bond buying maturities, Bank ofJapan would extend the maturity of bonds, FOJ next meeting April 27 2012, BOJ is expected to forecast economic growth 2012-2013 ; The Bank of Japan will consider purchasing bonds with longer maturity dates as part of monetary easing measures to be decided on at the next meeting of its Policy Board scheduled for April 27.

Sources said the BOJ will also look at increasing the size of the fund that has been used since October 2010 to buy up government bonds held by financial institutions and providing low-interest loans as a way of flooding the market with additional funds.

Such measures have pushed down interest rates, making it easier for companies to borrow money.

Because many companies take out loans that have to be repaid in two to three years, the central bank has implemented measures focused on lowering interest rates for that period.

As a result, the BOJ has been buying up government bonds with maturity periods of under two years.

Sources said the BOJ was now considering expanding that program to include purchases of bonds with maturity periods of between three and five years. That would push down interest rates for loans that have longer repayment periods and make it even easier for companies to take out such loans.

Longer term investments such as urban development projects and the development of natural resources could be boosted.

A further reduction in interest rates in general would also lead to the selling of yen assets and that could lead to a depreciation of the yen against foreign currencies. Such a development would help improve the profits of exporters.

The BOJ is expected to forecast economic growth for both fiscal 2012 and 2013 based on current economic and price trends.

While consumer prices are also expected to increase during that period, the inflation rate for fiscal 2013 is not expected to reach the government's target of 1 percent.

That would indicate economic recovery is still weak and the Japanese economy will still not be able to move out of its current deflationary state.

The central bank will consider additional monetary easing measures to support economic recovery by expanding the fund used to purchase government bonds by between 5 trillion yen and 10 trillion yen from the current 65 trillion yen ($797 billion).

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