Forgot your password?
Japan Bank's Haruhiko Kuroda In Aggressive Growth Move
BBC NEWS, BUSINESS
April 4, 2013: The Bank of Japan has said it will dramatically expand the country's money supply, as it tries to stimulate growth in the world's third-largest economy. The central bank vowed to boost an asset purchase program and meet a 2% inflation target in two years, after a two-day meeting, the first chaired by new governor Haruhiko Kuroda.
Japan's economy has been battling more than a decade of falling prices.
Mr Kuroda had previously said he would do "whatever it takes" to drive growth. "The BOJ will conduct money-market operations so that the monetary base will increase at an annual pace of about 60tn yen to 70tn yen ($645bn to $755bn)," the central bank said in a statement. This increase in the money supply is expected to stoke inflation.
Many analysts have said that falling prices discourage people from spending, and companies from investing, and that has trapped Japan in a cycle of sluggish growth and recession.
The yen fell against the US dollar, and Tokyo's Nikkei 225 index rose 2.2% on the central bank's decision, indicating markets were reacting positively to the stimulus measures.
"The measures announced overall were bold, and more than what had been expected," said Hiroshi Maeba, from UBS in Japan. "The markets clearly saw that the BOJ did all it can at this point and responded accordingly."
'Abenomics'
Prime Minister Shinzo Abe, who was elected last year, has been pushing for the Bank of Japan to do more to help the economy. His plan, a combination of big government spending as well as an aggressive central bank asset-buying program, has been dubbed Abenomics.
Mr Kuroda, who was nominated by Mr Abe for the top job at the central bank, is seen as sharing those views, which are a departure from the BOJ's previous stance.
On Thursday, the bank said it would also increase its purchases of Japanese government bonds to a total of 50tn yen, a move aimed at bringing down interest rates and spurring lending.
It also extended the average maturity of the bonds it purchases from three years to seven years. Finally, the bank said it would also buy relatively riskier assets such as exchange-traded funds and real estate trust funds.
The decisions passed with unanimous votes from the board of the central bank, an indication that this would mark the beginning of Mr Kuroda's shift towards more aggressive monetary easing.
However, some observers have expressed concern that this new strategy will leave Japan, which already has the largest debt pile of any industrialized nation, even more in the red.
