Date
17 August 2017
Central bank governor Haruhiko Kuroda reaffirmed a goal to push Japan's consumer price inflation to 2 percent next year, as he announced further stimulus measures. Photo: Bloomberg
Central bank governor Haruhiko Kuroda reaffirmed a goal to push Japan's consumer price inflation to 2 percent next year, as he announced further stimulus measures. Photo: Bloomberg

BoJ unveils additional stimulus measures in surprise move

The Bank of Japan (BoJ) surprised global financial markets on Friday by unveiling additional stimulus measures, sending a signal that economic growth and inflation have not picked up as much as expected.

Central bank governor Haruhiko Kuroda portrayed the decision to bolster asset purchases as a preemptive strike to keep policy on track, rather than an admission that his plan to reflate the economy has derailed, Reuters reported.

“We decided to expand the quantitative and qualitative easing to ensure the early achievement of our price target,” Kuroda was quoted as saying at a news conference, reaffirming the BoJ’s goal of pushing consumer price inflation to 2 percent next year.

“We are in a critical moment in the effort to break free from the deflationary mindset.”

In a rare split decision, the BoJ board voted 5-4 to accelerate purchases of Japanese government bonds so that its holdings increase at an annual pace of 80 trillion yen (US$723.4 billion), up by 30 trillion yen, the report said.

The central bank will also triple its purchases of exchange-traded funds and real-estate investment trusts and buy longer-dated debt.

“Japan’s economy continues to recover moderately as a trend and its expected to keep growing above its potential,” the BoJ said.

“But weak domestic demand after the sales tax hike and sharp falls in oil prices are weighing on prices,” it said, referring to the move in April to hike the sales tax to 8 percent from 5 percent.  

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RC

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