Yen rise alarms some in BOJ, easing chances rise: sources

By Leika Kihara

TOKYO (BestGrowthStock) – The yen’s rise to a fresh 15-year high against the dollar on Tuesday has somewhat increased the previously negligible chances that the Bank of Japan will ease monetary policy before its rate review next month, sources familiar with the matter said.

But action before the BOJ’s rate review on September 6-7 remains far from a sure bet because some in the bank feel more evidence of damage from yen gains is needed to justify moving now, they said.

“The mood isn’t good. Things have changed somewhat from yesterday,” one of the sources said. The sources declined to be named due to the sensitivity of the matter.

Sources said last week that the BOJ would consider easing policy at its rate review next month and was lining up its options, but was in no mood to act now.

Tuesday’s sharp yen gains and stock price falls, however, have alarmed some in the BOJ, who do not rule out the chance of easing policy before the September rate review if the yen continues to head toward its all-time high beyond 80 to the dollar.

The most likely option is for the BOJ to increase the size or extend the duration of a short-term fund supply operation put in place in December, analysts say.

BOJ Governor Masaaki Shirakawa is hesitant about further action, based on the view that the economy is on track for a moderate economic recovery. But that may change as the strong yen and slowing U.S. and Chinese growth inflict clearer damage on the economy.

(Editing by Edmund Klamann)

Yen rise alarms some in BOJ, easing chances rise: sources