The Bank of Japan (BOJ) yesterday further eased monetary policy, increasing its asset purchase program by ￥10 trillion (US$130 billion) to about ￥65 trillion, as it looks to end deflation.
It also said its policy board voted unanimously to keep the key interest rate unchanged at between zero and 0.1 percent.
“For the time being, the bank will pursue powerful monetary easing by conducting its virtually zero interest rate policy and by implementing the Asset Purchase Program mainly through the purchase of financial assets,” the BOJ said in a statement.
The easing, which follows a similar step in October, is intended to help nudge the year-on-year inflation rate to 1 percent, the bank said.
“The outlook for Japan’s economy continues to entail high uncertainty regarding the prospects and outcomes of the European debt problem, the supply and demand balance of electricity and the effects of the yen’s appreciation,” the bank said.
“The goal of overcoming deflation will be achieved through such efforts to strengthen growth potential and support from the financial side,” the bank said.
The BOJ action strengthened the dollar against the Japanese unit, with the greenback buying ￥77.92, up from ￥77.59 before the announcement, while the benchmark Nikkei index moved into positive territory in afternoon trade.
Tokyo shares reversed earlier losses and closed yesterday at the highest level in nearly six months, lifted by the BOJ’s midday announcement that it would further ease monetary policy.
The Nikkei index rose 52.89 points to end at 9,052.07.
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