LONDON (ShareCast) - The Bank of Japan (BOJ) unveiled on Thursday aggressive monetary easing in an effort to stimulate growth in the recession hit country.
The central bank said it would expand Japan's monetary base with a boost to an asset purchase programme which would double it by the end of 2014. It aims to meet a 2.0% inflation target in two years.
The announcement came after a two day meeting, the first chaired by the new Governor Haruhiko Kuroda.
Kuroda had previously expressed his commitment to carrying out forceful monetary policies as the world's third-largest economy continues to battle falling prices after a decade.
"The BOJ will conduct money-market operations so that the monetary base will increase at an annual pace of about 60trn yen to 70trn yen," the central bank said in a statement.
Thus, at the end of this year it is now projected to hit roughly 200trn yen and 270trn by the end of next year.
The move is expected to strengthen inflation. Kuroda said he was confident the new policies will achieve the inflation target.
"We can't escape deflation with the incremental approach that's been taken until now," he said following the announcement. "We need to use every means available."
Analysts have said that falling prices discourage people from spending and companies from investing.
The new measures will see the BOJ expand its balance sheet by 1.0% of gross domestic product each month this year and by 1.1% per month in 2014, according to Barclays (LSE: BARC.L - news) .
Markets reacted positively to the news as Tokyo's Nikkei 225 index gained 2.2%.
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