The Bank of Japan has announced plans to stimulate the sputtering economy with new quantitative easing. Under new leadership, the central bank plans to double the country's money supply by the end of next year.
Japan's central bank announced new monetary easing plans on Thursday, as the bank's new leadership follows government plans to boost the stagnating economy and end 15 years of falling prices.
The Bank of Japan said the "new phase of monetary easing" would aim to increase inflation to 2 percent within two years, doubling the amount of cash in the economy to 270 trillion yen (2.26 trillion euros, $2.87 trillion) by the end of next year, from 138 trillion yen at the end of last year.
The plans will also include buying government debt in greater quantities and with longer-term maturity, and riskier financial assets.
The yen dropped significantly on the easing announcement - good news for Japanese exporters, who rely on a lower-value currency to keep their products more affordable and competitive abroad.
Thursday's announcement came at the end of a two-day meeting of the Bank of Japan's policy board, headed since mid-March by former Asia Development Bank chief Haruhiko Kuroda. Analysts had been speculating for weeks about the outcome of the meeting, many expressing skepticism that the 2-percent inflation goal was realistic.
However Tsuyoshi Ueno, economist at NLI Research Institute, told AFP news agency that the easing plans represented a "huge regime change in monetary policy" and "met almost all policy measures that had been speculated in the market."
Governor Kuroda was appointed by Prime Minister Shinzo Abe, who was elected last December on promises to boost the Japanese economy, the third largest in the world. Abe had openly criticized the Bank of Japan's previous governor, Masaaki Shirakawa, for being too timid in reacting to deflation.
acb/hc (AFP, dpa)