Japan courts inflation in big stimulus move

The Bank of Japan announced on Tuesday its most determined effort yet to end years of economic stagnation saying it would switch to an open-ended commitment to buying assets next year and double its inflation target to 2%. It promised to reach the inflation goal "at the earliest possible time."

The Bank of Japan announced on Tuesday its most determined effort yet to end years of economic stagnation saying it would switch to an open-ended commitment to buying assets next year and double its inflation target to 2%. It promised to reach the inflation goal "at the earliest possible time."

HT Image

The steps represent the latest unorthodox effort by a leading central bank to support a weak recovery from the global financial crisis, although in Japan's case the country is also trying to overcome nearly two decades of low-grade deflation.

The announcement follows weeks of pressure from Prime Minister Shinzo Abe for a greater push to lift an economy out of recession. Consumer price inflation has reached 2% in only a handful of months since late 1990s.

"This is very good news. The BOJ has been more aggressive than the market expected," said Brian Redican , senior economist at Macquarie in Sydney.

The central bank said that from 2014 it would switch to an open-ended approach of buying a certain amount of assets - 13 trillion yen ($144.77 billion) - each month without setting a deadline for completing the purchases.