"They've been very smart, getting the government not to change the BOJ law without doing anything that dramatically different"
- Neale Vincent, strategist at Nomura Securities
The Bank of Japan bowed to pressure from the government led by the new Prime Minister Shinzo Abe to announce a plan for a bigger-than-expected financial stimulus. On Wednesday, the Japanese central bank claimed its readiness to lend the Tokyo government unlimited amounts of Yen in order to realize the plan which is aimed at ending two decades of economic stagnation. This scheme is also designed to boost inflation to 2%, to force down the value of the nation's currency and as a result, to make Japanese exports cheaper. Earlier this week, the BoJ adopted the 2% inflation goal after Shinzo Abe has piled relentless pressure on the central bank to take bolder measures to boost growth in the world's third largest economy.
"They've been very smart, getting the government not to change the BOJ law without doing anything that dramatically different," said Neale Vincent, strategist at Nomura Securities in Tokyo.
"Abe seems to be quite happy with the new inflation target, so I don't think he will pressure the BOJ into acting again next month. But there could be one more easing by April," said Izuru Kato, chief economist at Totan Research Institute in Tokyo.
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