The BoJ can’t do the ECB’s job for it

The drop in peripheral euro-zone bond yields following the Bank of Japan’s announcement that it is set to expand its quantitative easing programme dramatically has further relieved the near-term pressure on the ECB to implement its own Outright Monetary Transactions (OMT) programme. But there are clear doubts over the extent to which Japanese funds will flow into peripheral bond markets, particularly give recent signs that the region’s crisis is not over. Meanwhile, the BoJ’s more aggressive stance threatens to fuel concerns that the ECB is lagging behind other central banks and lead to a further unwanted rise in the euro.