Japan will embark on a "bold", unlimited money-printing programme next year, the Prime Minister, Shinzo Abe, said today.
The "monetary regime change" sees the Bank of Japan adopt the same strategy as the US Federal Reserve, which has committed to unlimited quantitative easing until the US unemployment rate drops below 6.5 per cent.
Japan's central bank has also set a 2 per cent inflation target to help tackle prolonged deflation. Price increases have been hovering below 0.5 per cent for two years despite surges in energy costs, while the world's third-biggest economy is also back in recession.
Masaaki Shirakawa, Bank of Japan governor, vowed to achieve the inflation benchmark "as soon as possible", with the programme of QE beginning in January next year when current efforts are completed.
Mr Abe is also seeking to spur growth through government spending on public works, as well as committing to improve the competitiveness of Japan's economy through the tax system.