Expected a cure of horse was that of half measures

Expected a cure of horse, was that of half measures. That was the feeling of analysts after the relaxation of monetary policy announced yesterday by the Bank of Japan (BoJ) to try to counter the increase in the yen which led the Japanese currency to record levels against the dollar and the euro.

At the end of an emergency meeting, the Central Bank announced its decision to increase the amounts allocated to fixed rate Bank loans: it in fact expands the exceptional device in place since late 2009 of 20,000 to 30,000 billion yen (276 billion euros). On these 30,000 billion, 10,000 will be allocated to six months, it said. These measures were expected, as the decision of the Bank to leave its rate target day the day unchanged at 0.1.

The largest Japanese lobby of affairs - Keidanren-a welcomed the monetary easing. But analysts have criticized the lack of scale of decisions, that they call "half-measures." Their effect will be equivalent to "zero", warned Macquerie Bank economist, Richard Jerram, quoted by the Agency Dow Jones, so they had been widely anticipated by the market, he said. The yen also briefly assigned ground after the announcement of the results of the Central Bank, to the highest levels. Its Governor, Masaaki Shirawaka, said yesterday be prepared to go further in its action if necessary.

"All possible measures".

But all eyes are now turning to the Government which announced yesterday, a recovery plan of the order of 920 billion yen (8.5 billion) to stimulate the economic activity in the country. "We have established a basic plan for employment, investment, education, the fight against natural disasters in communities and regulatory reforms," said the Prime Minister, Naoto Kan. By adding that the Government would have recourse to a budgetary extension if necessary. These new measures should be recorded by the Council of Ministers on 10 September.

Last Saturday, the Finance Minister said that he was ready to use "all the measures possible" to stem the rise of the yen which weighs on exports and the growth of the country. L'ex-deuxième global economy, which saw delight this role by China, is facing a slower recovery in 2009. The yen soaring concerned the Japanese companies 40 said they were ready, Friday, to relocate to avoid continue to suffer the negative effects of exchange rate head-on.

The Prime Minister has also asked his Minister of economy, trade and industry Masayuki Naoshima to develop "a plan to promote investment in the country" to here in October, according to several Japanese newspapers. The goal would be, according to the press Japan to invest in the economy some 200,000 billion yen (1.859 billion euros) currently sleeping on Japanese firms deposit accounts.

Assuming however that Naoto Kan is still at his post by then. Appointed just three months ago, the Prime Minister will be on September 14, the day of the election of the President of the Democratic Party of Japan (DPJ), if there is or not at the head of the party. If his rival Ichiro Ozawa, his future at the head of the country seems very compromised.