"Japan’s currency war has just begun"

From MacroBusiness:

Global macro UBS analyst, Syed Mansoor Mohi-uddin, has a very neat little note out this morning summarising the revolution that has just taken hold of Japanese monetary policy:
The first meeting of the Bank of Japan under Governor Kuroda has surpassed expectations. The central bank has effectively agreed to double its pace of JGB purchases to Y7.5trn a month. This will increase its bond holdings from Y90trn now under its Rinban and Asset Purchase Programmes to Y140trn by the end of 2013 and Y190trn by the end of 2014.

In addition, the BoJ will combine its APP and Rinban operations into a single quantitative easing facility. It will also abandon its ‘bank notes rule’ that restricted its JGB holdings to the size of currency in circulation, and the BoJ will now buy bonds up to a maturity of 40 years. Overall, the BoJ will now target Japan’s monetary base rather than its overnight interest rate.

This major shift – the BoJ will buy around $80bn a month of assets compared to the Federal Reserve’s $85bn a month of easing in an economy less than half the size of America’s – is reminiscent of 1995. Over the last two decades, the Bank of Japan has undertaken various episodes of quantitative easing – including targeting commercial bank reserves from 2001-2006 and starting its Asset Purchase Programme from 2010 – but investors have to go back to 1995 for the last time changes in domestic monetary policy strongly beat expectations....MORE

HT: The Big Picture