BoJ follows QE3 with fresh stimulus The Bank of Japan has responded to recent easing by the US Federal Reserve and the European Central Bank with a fresh monetary stimulus package, warning of a "deceleration" in overseas economies and a "pause" in domestic growth. The central bank will increase the size of its asset-purchasing programme - its key policy tool, since interest rates are already near zero - by about Y10tn ($126bn) to Y80tn, by buying another Y5tn of short-term government bills and another Y5tn of longer-term government bonds. The deadline for completing those purchases will also be pushed back, from June 2013 to the end of 2013. "The BOJ took more action than we anticipated," said Jun Azumi, Japanese finance minister, adding that the move was timely given signs of slowing growth in Japan. Fed chairman Ben Bernanke's decision last week to launch another multibillion-dollar round of asset purchases to revive the US economy had thrown a spotlight on his Japanese counterpart, Masaaki Shirakawa. Even so, most analysts had expected the relatively conservative BoJ governor to hold off from easing measures until the end of October, when the bank is to update its semi-annual forecasts on growth and inflation. The BoJ also scrapped its minimum 0.1 per cent bidding yield for buying JGBs and corporate bonds - a move Mr Shirakawa appeared to rule out last month when he said he was "not thinking" of doing so. Within half an hour of Wednesday's announcement, the yen had lost 0.6 per cent against the dollar, falling to Y79.17, its lowest level for a month. Tokyo stocks gained more than 1 per cent. "This was welcome, and long overdue," said Shogo Fujita, chief Japanese bond strategist at Bank of America Merrill Lynch in Tokyo. The BoJ had kept very upbeat on growth, while the street had started to downgrade everything. They're now recognising that risks are higher now. Analysts described these moves as a twin-pronged attack on the strong currency, which has weighed on corporate sentiment in Japan by reducing the value of overseas earnings. Lower yields along the curve, they said, should reduce the appeal of the yen as a haven from economic turmoil. "The main message from today's decision is that the BoJ is following the global trend set by the Fed and the ECB," said Junko Nishioka, chief Japan economist at RBS in Tokyo. But she added that pushing back the deadline for completing the asset-purchase programme by six months may not be enough to fundamentally weaken the yen, given that the Fed has committed to maintaining its zero interest rate policy until 2015. The market will continue to call for the BoJ to take bold action.