Just FYI. I've read this earlier today, from Thomson Reuters(DailyFX)............
"May 11. 19:19GMT USD/JPY: Exit Strategies?
The Center for Pacific Basin Studies at the Fed San Francisco has various publications discussing Japan"s experience with quantitative easing and "exit strategies." The BOJ embarked upon a 5-year QE policy in March 2001. It increased its target for current account balances (CAB) held by commercial banks, bought JGBs, and lowered interest rates to zero. It raised the CAB target nine times over the course of three years. Thanks to manageable budget deficits, an accommodating JGB market, and current account surpluses, the BOJ met each of its CAB targets. The policy was lifted in March 2006.
Regarding "exit" strategies, there are a couple of differences between today"s Fed policy and the BOJ QE policy earlier this decade. Outside of the inequities of the system and mechanics of their respective operations, the BOJ policy appears more verifiable. As Fed San Fran points out, in 2004, Mr. Fukui said that the BOJ will maintain its QE policy until "the year-on-year change in the CPI registers zero percent or higher on a sustainable basis". By contrast, Mr. Bernanke and Mr. Kohn have yet to commit to any numerical target. Second, the BOJ had set a 5-year timetable. The Fed has no such timetable. Instead the Fed is trying to maximize flexibility. This flexibility creates vagaries and uncertainties that will ultimately show up in prices. Finally, there is a question about the pace at which the QE is removed. BOJ began the program in 2001 and had raised CAB balances to nearly JPY35trln by December 2004. This is when the debate about inflation and "exit strategies" was in full force. The BOJ program ended with a rate hike in early 2006 but CAB balances were being sharply reduced prior to this. In other words, the gearing of the BOJ QE policy was five years of easing and one year of tightening. Given that the Fed began its QE effort in March, it seems odd for it to be discussing "exit strategies" so soon. If Japan"s post QE experience is any guide, the Fed will be raising rates in less than a year and will be revisiting QE in 2011."
"May 11. 19:19GMT USD/JPY: Exit Strategies?
The Center for Pacific Basin Studies at the Fed San Francisco has various publications discussing Japan"s experience with quantitative easing and "exit strategies." The BOJ embarked upon a 5-year QE policy in March 2001. It increased its target for current account balances (CAB) held by commercial banks, bought JGBs, and lowered interest rates to zero. It raised the CAB target nine times over the course of three years. Thanks to manageable budget deficits, an accommodating JGB market, and current account surpluses, the BOJ met each of its CAB targets. The policy was lifted in March 2006.
Regarding "exit" strategies, there are a couple of differences between today"s Fed policy and the BOJ QE policy earlier this decade. Outside of the inequities of the system and mechanics of their respective operations, the BOJ policy appears more verifiable. As Fed San Fran points out, in 2004, Mr. Fukui said that the BOJ will maintain its QE policy until "the year-on-year change in the CPI registers zero percent or higher on a sustainable basis". By contrast, Mr. Bernanke and Mr. Kohn have yet to commit to any numerical target. Second, the BOJ had set a 5-year timetable. The Fed has no such timetable. Instead the Fed is trying to maximize flexibility. This flexibility creates vagaries and uncertainties that will ultimately show up in prices. Finally, there is a question about the pace at which the QE is removed. BOJ began the program in 2001 and had raised CAB balances to nearly JPY35trln by December 2004. This is when the debate about inflation and "exit strategies" was in full force. The BOJ program ended with a rate hike in early 2006 but CAB balances were being sharply reduced prior to this. In other words, the gearing of the BOJ QE policy was five years of easing and one year of tightening. Given that the Fed began its QE effort in March, it seems odd for it to be discussing "exit strategies" so soon. If Japan"s post QE experience is any guide, the Fed will be raising rates in less than a year and will be revisiting QE in 2011."