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The Fed Ends Its QE-3 Program While The Japan Central Bank Expands Its Program

This past Wednesday, the Fed announced the cessation of its bond buying program under QE-3.  Today, the Japan Central Bank, in a divided 5 – 4 vote, went the other way, announcing the expansion of its similar bond buying program to purchase long term debt.  While the Fed feels confident that the US economy is in a healthy and continued growth place, the Japanese Central Bank feels the need to expand its stimulus program to stave off a lagging economy.  Combined with increased government spending and structural economic reform, Prime Minister Shinzo Abe intends to provide a boost to Japan’s economy.  All of that is in contrast to the Fed and other central banks, which have been tapering their monetary policy intervention as their economies are recovering.  Will Abe’s tactics halt the long-term deflation in Japan, one of the world’s largest economies?  Perhaps one indication of confidence in the Central Bank’s action in conjunction of Abe’s plan is the pop of about 5% in the Nikkei following the announcement and a total of 7% over the last three days. Stay tuned.