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Japan central bank moves to boost economy

Bank of Japan doubles inflation target as PM Shinzo Abe's government pushes for plan to kick-start struggling economy.
Last Modified: 22 Jan 2013 07:33
Investors had been waiting for the Bank of Japan decision since mid-November [AFP]

Japan's central bank has taken its boldest action yet to lift the country's struggling economy.

The Bank of Japan on Tuesday doubled its inflation target and took on an open-ended commitment to buy assets.

Prime Minister Shinzo Abe's government has been pushing for a plan to kick-start Japan's economy, which is the third largest in the world.

He is hoping to spur growth in his second term in office, through heavy government spending on public works and other projects.

Jeff Kingston, the director of Asian Studies at Temple University in Tokyo, told Al Jazeera that this time around, Abe was focusing on the economy.

"Everyone is worried about his idealogical objectives, but it looks like he is putting that aside and focusing on the economy," Kingston said.

The Bank of Japan adopted the two percent inflation target demanded by the country's new government.

"The bank sets the 'price stability target' at two percent in terms of the year-on-year rate of change in the consumer price index," the bank said in a statement.

"The Bank will pursue aggressive monetary easing ... through a virtually zero interest rate policy and purchases of financial assets," it added.

"With respect to the Asset Purchase Program, the Bank will introduce a method of purchasing a certain amount of financial assets every month without setting any termination date," it said.

Investors had been waiting for the Bank of Japan decision since mid-November when Abe, then the leading candidate to win the general election, began calling for aggressive easing to help weaken the yen.

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Source:
Al Jazeera and agencies
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