TOKYO, Nov 5 (Reuters) - The Bank of Japan kept interest rates at zero and held off on easing monetary policy on Friday, after the Federal Reserve’s bond buying plan failed to trigger yen gains sharp enough to warrant an immediate policy response.
The central bank fleshed out its plans to buy exchange-traded funds (ETFs) and real estate investment trust funds (REITs) under its new 5 trillion yen ($62 billion) asset-buying scheme.
Details are as follows:
-- The BOJ plans to start buying government bonds under the asset-buying scheme at the beginning of next week. It will start buying and ETFs and REITs from mid-December.
-- The BOJ will offer to buy 100 billion yen each in corporate bonds and commercial paper (CP) in its first market operation for them under the asset buying scheme. It will buy corporate bonds on Dec. 9 and CP on Dec. 15.
-- It will buy REITs rated AA, which denotes very high creditworthiness, or above. Since it will be the first time the BOJ has bought REITs, it decided to play it safe and not include those rated BBB. Of Japan’s 3.2 trillion yen market for REITs, those rated AA or above make up roughly 1.6 trillion yen.
-- The BOJ will buy ETFs and REITs through a trust bank to avoid intervening directly in the market.
-- When buying REITs, the BOJ will limit its purchases to up to 5 percent of a particular fund’s total issue amount.
-- The maximum amount of each ETF and REIT to be purchased will be in proportion to each issue’s market value.
-- The BOJ adopted somewhat more cautious language in its economic assessment. It said Japan’s economic recovery seemed to be pausing, the central bank’s way of describing the economy as in a lull. It downgraded its assessment on exports and production, saying they have been more or less flat. ($1=80.72 Yen) (Reporting by Leika Kihara and Rie Ishiguro; Editing by Michael Watson)
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