Japan’s central bank has launched a massive stimulus package in a dramatic shift in monetary policy aimed at boosting inflation to 2% within two years.
Haruhiko Kuroda, governor of The Bank of Japan, announced Thursday that it would launch “a new phase of monetary easing both in terms of quantity and quality” and double the amount of money in circulation to as much as 70 trillion yen ($730 billion) a year.
The bank would continue to pump money into the economy until the inflation target was “sustainably forseen”.
“The previous approach of incremental easing wasn’t enough to pull Japan out of deflation and achieve 2% inflation in two years,” Kuroda said. “This time, we took all necessary steps to achieve the target”.
Analysts said that while achieving the 2% inflation in two years was an uphill battle, the central bank’s policies indicated a higher possibility of reaching that target.
Boosting inflation would stimulate consumer and business spending that is needed to revive the economy from nearly two decades on deflation, Prime Minister Shinzo Abe has said.