Japan is a radical change in its monetary policy to stimulate inflation, and the world's third-largest economy, a long-term, debilitating downturn.
Forced Prime Minister Shinzo Abe (Shinzo Abe), more active and loose monetary policy, the Bank of Japan on Thursday announced policy reforms, designed to double the money supply to achieve the inflation target of 2%, "as early as possible time the time span of approximately 2 years. "
Central Bank President Haruhiko Kuroda (Haruhiko Kuroda) described as the scale of monetary stimulus "beyond reason," but he said the inflation target is still out of reach, if the central bank insists on gradual steps.
"We will not hesitate to make adjustments, if necessary, at the same time monitoring the economic and price situation," he said.
The Bank of Japan will also join the U.S. Federal Reserve and other major central banks to soak money to businesses and consumers begin to spend more virtuous circle, after two decades of sluggish economic growth track.
The central bank said it intends to "completely change the expectations of the market and economic entities."
The financial markets are worried about it, This Kuroda may not live up to expectations, bold steps, reaction breath. Down to about 95.5 yen against the U.S. dollar, the Japanese yen, which is trading 92.8 yen per dollar after the announcement. The benchmark Nikkei 225 stock index rebounded to a negative close 2.2 percent higher.
Mark Williams of Capital Economics (Mark Williams) "through a commitment to achieve the inflation target of 2% within two years, the governor Kuroda can justifiably require a new road of the Bank of Japan, said:".
"However, Although the market welcomes the announcement, the credibility of the commitment, which is likely to soon be questioned, he said:" In a commentary.
Kuroda commitment to do what he must, within two years in order to meet the inflation target. Thursday after a two-day policy meeting, the central bank policy decisions. The signal behind Kuroda consensus, the unanimous support of the Board of Directors agreed project consisting of nine members.
The policy shift is a pretty Shinzo Abe, the LDP needs in the economic recovery in the upper house before the July parliamentary elections progress. LDP hope that a strong enough mandate to promote the other items on their wish list, such as the political difficulties of economic and educational reform and change the Constitution to the high visibility of Japan's military.
Economy, Trade and Industry Minister Akira Amari, participate in policy meetings, Kuroda praise, gave him very high marks, "
More active primary task of easing monetary policy, increasing the demand for public expenditure and reform the economy more competitive, and to help perk up in the long run.
Kuroda line Shirakawa Masaaki (Masaaki Shirakawa) predecessor, who stepped down March 19, Shinzo Abe has accused unwilling to be bold enough to loose monetary policy, the economy back on track. Under the auspices of the steps of the first policy meeting on Thursday announced that exceeded expectations in this regard by Kuroda.
"The first step is to get rid of deflation and nominal growth to be much higher," Yamamoto Kozo Shinzo Abe's Liberal Democratic Party, senior members of Congress said Wednesday. He said that, to achieve this goal requires the money supply has doubled.
Reform of the Bank of Japan's policy seems to be a major concession, the Government's request, although the surface of the bank's autonomy.
The bank to maintain its benchmark interest rate at 0.1%. But the central bank for money market operations in order to meet the long-term interest rates near zero target, rather than focus on the monetary base, or cash in circulation and bank deposits reserves total amount of 60 trillion yen, increased to 700,000 days yuan ($ 63.7 billion U.S. dollars to 74.4 billion U.S. dollars) a year. The monetary base at the end of 2012 to 138 trillion yen ($ 1.45 trillion).
The idea is to increase the amount of cash in circulation, driving up prices, including assets, to encourage more consumer who owns the stock and property.
"If the price does not go up, wages do not go up. Shinzo Abe said," If people believe that prices will be higher six months now, then they will think it is best to buy now rather than later through Fortunately, Tuesday's parliamentary debate .
The critics SO-called "Abenomics", if there is no wage increases match prices, many consumers may be more reluctant to spend.
The answer economic stimulus plan will increase Japan's huge public debt concerns, said in a statement that the purchase of government bonds, "the purpose of implementation, and the implementation of monetary policy, rather than to fill the fiscal deficit purpose."
The Bank of Japan will increase the purchase of Japanese government bonds, up to 50 trillion yen ($ 53.1 billion U.S. dollars) a year to help low interest rates and promote more borrowing, such as housing loans. It will continue to buy commercial paper and corporate bonds 22,000 yen ($ 2.3 billion) and 320 trillion yen ($ 34 billion), respectively, the level and maintain that level.
The central bank also extended the average remaining term of the bond purchase slightly less than three years, an average of 7-year bonds of all maturities up to 40 years to enjoy.
As expected, the bank can also be purchased, and expand the range of assets, including a higher risk of real estate investment trusts and exchange-traded funds. Will also be the end of its current asset purchase program, absorbed into the purchase of bonds in the future, it said.
The Bank of Japan will "review the upside and downside risks for economic activity and prices, and make adjustments as appropriate," it said.
"Reflation" strategy will only work if the future inflation prompted the expectations of consumers and businesses to spend more money, faster, to avoid price increases. They say that the deflationary stagnation in the past 15 years, mainly due to the tendency of consumers to hold back, waiting for prices to fall further.
But a variety of other factors, including China, the roll is expected to reduce manufacturing costs and weak demand due to Japan's shrinking and aging populations, but also to encourage companies to hire and invest, pulling prices lower.
The Bank of Japan acknowledged that the consumer price index has recently been a slight decrease, "Although the yen against the U.S. dollar and other major currencies imported energy and food prices, to improve the daily living expenses of many Japanese.
 



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