Japanese Prime Minister Shinzo Abe’s cabinet approved 13.5 trillion yen ($132 billion) in fiscal measures on Tuesday even as the central bank fought market speculation that it is preparing to put the brakes on monetary stimulus for the world’s third-biggest economy.
The package includes 7.5 trillion yen in spending by the national and local governments, and earmarks 6 trillion yen from the Fiscal Investment and Loan Program, which is not included in the government’s general budget.
But even before the announcement, Japanese government bonds saw their worst sell-off in more than three years as investors feared the Bank of Japan may ratchet back the pace of its aggressive government bond buying.
The BOJ disappointed markets on Friday by keeping bond purchases steady, defying expectations it would hoover up more, and made traders even more nervous after announcing it would re-evaluate policies in September. Read More