Japan central bank has launched a more aggressive monetary policy to pull the county’s shrinking economy out of the deflation it has struggled with for almost 20 years.
It is boosting its programme of buying government bonds by the equivalent of 97 billion euros and has set an inflation target of one percent.
Shares rose in Tokyo and the yen weakened against the dollar, but some economists complained the bank has bowed to political pressure.
This comes after government calls for action and the worry is that policy easing will undermine the central bank’s independence.
It would also leave it open to further pressure from lawmakers, especially if more aggressive US monetary stimulus exerts fresh upward pressure on the yen.
“The BOJ apparently bent to political pressure, leaving the market with the impression of its vulnerability,” said Yuichi Kodama, an economist at Meiji Yasuda Life Insurance.
“If the Fed embarks on additional easing, the BOJ is likely to come under pressure again and again and it may tweak its asset purchase scheme and start buying government bonds with longer maturities.”
Most central banks set inflation targets to anchor expectations and prevent prices from rising too quickly. In Japan’s case, an inflation goal will act as an incentive to pursue more aggressive easing to stop prices from declining.
Core inflation fell in 2011 for the third straight year.
The Fed last month took a historic step of setting an inflation target and extended its commitment to near zero rates, leaving the door open to more easing that could further weaken the dollar and put the yen under renewed upward pressure.
The yen rose to record highs against the dollar last year, which hit exports and sparked a wave of corporate calls for official action as well as prompting unilateral currency intervention by Japan on October 31.
Copyright © 2015 euronewsMore about:
- 1Hard times ahead for Ukraine with massive job cuts and price hikes on the way
- 2Riga at the heart of Europe’s digital revolution
- 3German doubts in Greek debt crisis
- 4Highest number of Germans below poverty line since reunification
- 5Ireland and Denmark get a slice of Apple as company announces huge European project
- 1euronews live TV - News | euronews : the latest international news as video on demand
- 2eurovibes - a selection of Europe’s best music talent
- 3Exclusive: CIA and Mossad are behind Boko Haram and ISIL, says Sudan president | euronews, world news
- 4Greek debt: who will pay if Greece fails? | euronews, world news
- 5English and Spanish among happiest languages | euronews, world news
- 6Exclusive: Tsipras promises meritocracy, transparency for Greece, urges Europe to put people first | euronews, world news
- 7European Union News | euronews: latest breaking news and headlines about European Union
- 8Dramatic dashcam video captures Taiwan plane crash | euronews, world news
- 9International news | euronews, latest international news
- 10Data ‘mocks’ claims migrants try for Europe ‘expecting’ sea rescue | euronews, world news
- 11Watch: Ukraine MPs in fierce fist fight outside parliament | euronews, world news
- 12Live updates: follow the 2015 Oscars ceremony | euronews, world news
- 13Kosovo emptying out, hopes for independent future exhausted | euronews, world news
- 14Canada: Valentine’s Day mass shooting plot foiled say police | euronews, world news
- 15Implanted RFID chip controls office access for Stockholm workers | euronews, hi-tech
- 16‘Blue’ dress causes internet confusion. Is it white and gold? | euronews, world news
- 17Barack Obama’s silly Buzzfeed video goes viral | euronews, world news
- 18euronews apps : iPhone, iPad, Android, Windows Phone 8, Windows 8, Nokia S40, Nokia Asha, Smart TV and Google Glass
- 19Elastic road surface reduces motorway noise pollution | euronews, futuris
- 20‘Europe’s interests come first’, says new Greek government | euronews, world news
Wires > Business
- 01:46 CET Asia edges up after China rate cut, euro sags
- 01:26 CET China’s economic growth expected to slow to 7 percent in first…
- 01:15 CET Berkshire insurance ‘superstar’ could fill Buffett’s shoes
- 22:47 CET Samsung unveils sleek new Galaxy phones to take on Apple
- 18:12 CET RWE presses ahead with DEA sale as UK demurs
- 18:07 CET Bells toll for Europe’s largest gas field
- 17:18 CET Spanish PM hits back at Greek accusation of anti-Athens ‘axis’
- 16:13 CET Spanish PM hits back at Greek accusation of anti-Athens ‘axis’