THE BANK of Japan yesterday unveiled its most determined effort yet to end years of economic stagnation in the country, saying it would switch to an open-ended commitment to buying assets next year and double its inflation target to two per cent.
It issued a joint statement with the new government promising to reach the inflation goal “at the earliest possible time,” drawing praise from Prime Minister Shinzo Abe, who has piled relentless pressure on the central bank to take bolder measures to pull Japan out of deflation.
The decision to adopt asset buying with no end date had exceeded market expectations, analysts said. But Tokyo stocks fell and, after an initial selloff, the yen rose on investor disappointment that the expanded stimulus would not start until 2014.
Having slashed interest rates close to zero, the BoJ’s policy is the latest unorthodox effort by a leading central bank to try to boost an otherwise weak recovery from the global financial crisis and, in Japan’s case, overcome more than a decade of deflation.
City A.M. Reporter