{{Japan, the world’s third largest economy, is taking bold measures to spur inflation and increase spending after a 15-year slump.}}
Bowing to demands from Prime Minister Shinzo Abe, the Bank of Japan (BoJ) announced on Thursday that it would reconfigure its policies to double the money supply, or the amount of funds in circulation, and achieve a 2 percent inflation target at the “earliest possible time”.
Kozo Yamamoto, a senior lawmaker in Abe’s Liberal Democratic Party, said: “The first step is to get out of deflation and get a much higher nominal growth rate.”
A doubling of the money supply was needed to achieve that aim, he said.
The policies are a fundamental shift in how the central bank conducts monetary policy and appear a major concession to government demands, despite the bank’s ostensible autonomy.
The bank’ s new phase of monetary easing would, it said, “drastically change the expectations of markets and economic entities”.
Tsuyoshi Ueno, economist at NLI Research Institute, described the moves as a huge regime change in monetary policy.
“What the BoJ announced today met almost all policy measures that had been speculated in the market,” Ueno added.
Aljazeera
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