GLOBAL threats to the economy and the impact of the strong yen pushed the Bank of Japan into expanding its asset purchase programme yesterday.
The policy board voted eight to one to buy an extra ¥5 trillion (£41bn), increasing the total size of the programme to ¥55 trillion.
An “adverse effect from a slowdown in overseas economies and the appreciation of the yen will continue for the time being”, the Bank said, but “Japan’s economy is expected to return to a moderate recovery path” as a global pick-up is anticipated.
Economic growth of 0.3 per cent is expected through 2011, while the Bank cut its forecasts for 2012 to 2.2 per cent, down from 2.9 per cent.
This is the second bout of easing since August, as price stability is another of the Bank’s targets. Deflation is still a risk, “depending on developments in global financial markets and overseas economies”, it said, necessitating the extra QE.