Japan sets two per cent inflation target
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AP
2013-01-22
Japan's central bank has pledged more aggressive action to boost the economy, including setting a two per cent inflation target.
The Bank of Japan said it would conduct "open-ended" asset purchases to help achieve the goal of breaking out of a long spell of deflation.
Prime Minister Shinzo Abe had urged the central bank to ease monetary policy to help the recession-struck economy escape from years of falling prices.
Whether the effort will succeed remains to be seen: the central bank has not achieved even its one per cent inflation target, with price increases hovering below 0.5 per cent for the past two years despite surges in energy costs.
The central bank described its inflation goal as a "price stability target".
""Under the price stability target, the bank will pursue monetary easing and aim to achieve this target at the earliest possible time," it said.
But it said it would also "ascertain whether there is any significant risk to the sustainability of economic growth, including from the accumulation of financial imbalances."
Among the risks are a ballooning public debt, already well over twice the size of Japan's gross domestic product.
Abe's government is seeking to spur growth through heavy government spending on public works and other projects and through monetary easing. The announcement by the central bank was in line with expectations.
Elaine Kurtenbach
