"The BOJ showed caution by failing to respond to Abe's request immediately"
- Hideo Kumano, chief economist at Dai-Ichi Life Research Institute
The Bank of Japan decided to take additional easing measures on Thursday, as incoming Prime Minister Shinzo Abe pledged to use any means in order to boost the economy. The BoJ has extended its asset-purchase programme, which is aimed at keeping borrowing costs down, by 10 trillion yen ($119bn; £73bn) to a total of 76 trillion yen. This is already a third easing in four months, as previously expanded purchases failed to halt gains in the nation's currency, while no improvement in the economy was seen as well. In the meantime, the bank also decided to leave its interest rates unchanged between zero and 0.1%. Earlier this week, Abe decided to press for a 2% inflation target, compared with a previous target of 1%, and also suggest that only unlimited stimulus may boost economic growth.
"The BOJ showed caution by failing to respond to Abe's request immediately," said Hideo Kumano, chief economist at Dai-Ichi Life Research Institute in Tokyo and a former central bank official. "The bank has been clear that it can't beat deflation on its own."
"The BOJ will come up with something that's just enough to avoid criticism from Abe but probably not enough to avoid some sense of disappointment," said Masamichi Adachi, senior economist at JP Morgan Securities in Tokyo.
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