Japan tries ‘shock and awe’ to jump-start stalled economy
Thursday 04 April 2013
The Bank of Japan launched “shock and awe” tactics today to pull the world’s third-biggest economy of its deflationary spiral with a hugh expansion of its money printing programme.
The yen plunged more than 2 per cent today as the BoJ’s new governor Haruhiko Kuroda — under pressure to boost the economy from Prime Minister Shinzo Abe — embarked on plans to reflate the economy and hit a 2 per cent inflation target, against minus 0.7 per cent in February, within two years.
Against the backdrop of an economy which has been stagnant or shrinking since the second quarter of last year, Japan’s central bank will nearly double the size of its bond purchases, double the money supply and vastly extend the breadth of the assets it buys to include private sector debt.
The central bank’s so-called “banknote rule”, under which it keeps government bond purchases below the amount of banknotes in circulation, will also be torn up. Kuroda called it “a new phase of monetary easing both in terms of quantity and quality” to “drastically change the expectations of markets”.
Tokyo’s Nikkei average soared more than 2 per cent on the BoJ’s announcement, on expectations that the slump in the yen will give a shot in the arm to Japan’s export-led economy.
It is hoped the aggressive monetary policy efforts will inflate prices and encourage more spending. They come alongside increased public spending from Abe to boost demand and make Japan’s debt-laden economy more competitive.
Chris Scicluna, head of economic research at Daiwa Capital Markets Europe, described the move as a “shock-and-awe policy”.
While he warned that the policy was by no means guaranteed to bring success, he said: “They’re doing a whole lot more. What they’ve down up to now has been a bit grudging. They are doing things on a far bigger scale.”
- 1 Rihanna 'nude photos' claims emerge on 4Chan as hacking scandal continues
- 2 Frank Lampard equalises for Manchester City against Chelsea: how Twitter reacted
- 3 Kim Kardashian 'nude photos' leaked on 4chan weeks after Jennifer Lawrence scandal
- 4 Free U2 album: How the most generous giveaway in music history turned PR disaster
Rihanna 'nude photos' claims emerge on 4Chan as hacking scandal continues
Kim Kardashian 'nude photos' leaked on 4chan weeks after Jennifer Lawrence scandal
Jennifer Lawrence leaked 4Chan sex video branded 'fake' by forum users
Gabrielle Union contacts FBI over nude 4Chan pictures leaked by 'vultures'
Jennifer Lawrence 'naked sex video' will be leaked next, threatens 4Chan celebrity photo hacker
Scottish independence referendum: A nation divided against itself
Scottish referendum results: Cross-party consensus collapses amid Tory-Labour spat on the 'English question'
Scottish independence: David Cameron is becoming the 'George Bush of Britain'
Hilary Mantel 'should be investigated by police' over Margaret Thatcher assassination story, says Lord Bell
Plebgate MP Andrew Mitchell called officer a 'little s**t', claim court documents 'exposing ex-Chief Whip's 'record of abusing police'
Archbishop of Canterbury admits doubts about existence of God
iJobs Money & Business
£80 - 100k + Bonus: Guru Careers: A COO / Chief Operating Officer is needed to...
£400 - £450 Per Day: Clearwater People Solutions Ltd: **URGENT CONTRACT ROLE**...
Up to £100k or £450p/d: Saxton Leigh: My client is a leading commodities tradi...
£320 - £330 per day: Ashdown Group: The Ashdown Group have been engaged by a l...