The Bank of Japan announced on Thursday the world's most aggressive monetary stimulus today, promising to inject about 1.4 trillion dollars into the economy in less than two years, a radical gamble that sent the Yen reeling and bond yields to record lows.
New Governor Haruhiko Kuroda committed the BOJ to open-ended asset buying and said the monetary base would nearly double to 270 trillion Yen (2.9 trillion dollars) by the end of 2014 in a shock therapy to end two decades of stagnation.
This is an unprecedented degree of monetary easing a smiling Kuroda told a news conference after his first policy meeting at the helm of the central bank.
Kuroda said the central bank would double its purchase of Japanese government bonds each month to more than 78 billion dollars and try to push the country’s inflation rate to two percent in the next two years.
The Bank of Japan has decided in aiming for a monetary easing both in terms of quantity and quality intended to double the money supply and achieve a 2% inflation target at the earliest possible time, within a time frame of about two years.
We took all available steps we can think of. I'm confident that all necessary measures to achieve 2% inflation in two years were taken today, he said.
The scope of the changes Kuroda pushed through, and the fact he secured unanimous board support for them, drove the Yen down sharply, knocked the 10-year bond yield to a record low, and nudged Tokyo share prices just shy of a 4-1/2 year closing high.
Japan has had two decades of economic stagnation and 15 years of price deflation. The Bank of Japan has often taken incremental steps to try to boost Japanese economic fortunes, but Prime Minister Shinzo Abe demanded that the bank take more aggressive action.
Kuroda said the bank would show no hesitation in making further policy changes.
Both economics and finance is obviously dynamic in nature so we will show no hesitation in making appropriate adjustments as we monitor the economic activities. We have made all necessary decisions to achieve the two percent inflation target in two years.