The Bank of Japan’s decision to double the size of a liquidity program for banks may prove more effective in placating the government than stemming deflation.

The bank yesterday increased its three-month lending facility for banks to 20 trillion yen ($221 billion) in a 5-2 vote, a “monetary easing” that may help reduce borrowing costs and bolster corporate sentiment, Governor Masaaki Shirakawa said at a Tokyo press briefing.
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Brazilian central bank President Henrique Meirelles fueled record trading in short-term interest rate futures as investors bet -- correctly -- that he would hold off raising interest rates yesterday ahead of his decision on whether to run for elected office.
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Federal Reserve Chairman Ben S. Bernanke criticized a proposal in the Senate to limit the central bank’s supervision to the largest financial firms, saying it would undercut its ability to spot financial risks.

“The insights provided by our role in supervising a range of banks, including community banks, significantly increases our effectiveness in making monetary policy and fostering financial stability,” Bernanke told the House Financial Services Committee yesterday.
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Stocks saw moderate strength on Wednesday amid reassurances from the day's producer price data and yesterday's interest rate announcement that inflation remains subdued. The major averages ended the day firmly in positive territory, reaching their best closing levels in over a year.
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Treasuries eked out thin gains on Wednesday, as concern over tomorrow's jobless claims report may have prompted some buying interest in the safety of bonds, while the day's producer price data saw little reaction.

Bond prices spent the majority of the session near the flat line before turning higher just ahead of the close. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, finished at 3.642 percent, posting a loss of 1.1 basis points.
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The euro weakened for a second day against the dollar and yen amid concern Greece will fail to secure financial assistance from the European Union, reducing the appeal of assets in the 16-nation region.

Europe’s currency fell versus 15 of its 16 major peers after Michael Meister, the chief finance spokesman for German Chancellor Angela Merkel’s Christian Democratic Union party, said yesterday Greece should turn to the International Monetary Fund if it needs aid, signaling a rift with European leaders Jean-Claude Trichet, Jean-Claude Juncker and Nicolas Sarkozy. The yen rose after a China Securities Journal report said regulators forced banks to stop lending to some developers. The Swiss franc strengthened for a fifth day.
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European stocks are set to extend Tuesday's gains today, tracking firm Asian markets and higher commodity prices, as the U.S Federal Reserve renewed its pledge to keep benchmark rates near zero for an extended period and the Bank of Japan doubled its short-term lending program to fight deflation, while keeping interest rates at a record low.
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The European markets rose on Tuesday after Standard & Poor's affirmed its credit ratings on Greece's debt.

S&P affirmed Greece's BBB+ long-term and A-2 short-term sovereign credit ratings and took them off credit watch with negative implications but the outlook is negative from stable. "We view the Greek government's total package of deficit reduction measures as appropriate to achieve its 2010 fiscal target, given the deterioration in Greece's growth prospects," the rating agency said in a statement.
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US Secretary of State Hillary Clinton on Tuesday dismissed speculations that US-Israel relations were at their worst point in 35 years over an Israeli decision to build new housing units in Jerusalem despite Washington's objections, and re-affirmed her administration's commitment to Israel's security.
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The Indian market is higher in early trading on Wednesday on the back of firm global cues as the U.S Federal Reserve renewed its pledge to keep benchmark rates near zero for an extended period.

In the 30-share Sensex pack, Grasim, Wipro, Sun Pharma, TCS, Larsen & Toubro, ICICI Bank, Bharti Airtel, Reliance Communication, DLF, Tata Steel, Reliance Infrastructure and Jaiprakash Associates are up between 1% and 2.5%.
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