Exclusive: Bank of Japan likely to ease, may buy longer-dated government bonds
Reuters Business News | April 24, 2012

By Rie Ishiguro and Leika Kihara

TOKYO (Reuters) - The Bank of Japan is likely to ease monetary policy on Friday by boosting its asset-buying scheme and in doing so may extend the maturity of government bonds it targets under the program to around three years, sources familiar with the central bank's thinking said.

There is no consensus yet within the central bank on whether it should increase its 30 trillion yen ($370 billion) asset buying scheme by the usual and widely expected 5 trillion yen increment, or by double that amount.

Depending on the size of the increase, the BOJ may also extend the maturity of government bonds it buys under the scheme to around three years from the current two-year timeframe, said the sources who spoke on condition of anonymity due to the sensitivity of the matter

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"What appears to be certain is that the BOJ will ease on Friday. But there seems to be various views (within the bank) on by how much, so that will be a close call," one of the sources said.

With interest rates already virtually at zero, the BOJ has adopted as its main policy tool an asset-buying scheme under which it purchases assets ranging from government bonds to corporate debt and trust funds investing in property and shares.

Any expansion in the program at a meeting on Friday would be mostly for government bonds, although there is a slim chance the BOJ may also increase purchases of exchange-traded funds (ETFs) depending on the size of expansion, the sources said.

The BOJ now pledges to meet the 30 trillion yen target for asset purchases by the end of this year, but may extend that deadline by about six months if it were to further top up the program, the sources said. ($1 = 81.0750 Japanese yen)

(Additional reporting by Sumio Ito and Yoshifumi Takemoto; Editing by Tomasz Janowski and Joseph Radford)