Regulation

BoJ to maintain stimulus policy until inflation target reached

Bank of JapanThe Bank of Japan said last week that it would maintain its stimulus program until it reaches and can sustain its inflation target of two percent.

The announcement came just two days after the Federal Reserve said it would begin tapering its $85-billion-per-month asset purchases in January.

Consistent with its policy over the past few months, the BoJ said it would continue purchasing assets to boost the monetary base at an annual pace of $576 trillion to $672 trillion.

“With regard to the outlook, Japan’s economy is expected to continue a moderate recovery as a trend, while it will be affected by the front-loaded increase and subsequent decline in demand prior to and after the consumption tax hike,” the central bank said. “The year-on-year rate of increase in the CPI is likely to rise for the time being.”

The BoJ said maintaining the current policy “will support positive movements in economic activity, contribute to a rise in inflation expectations and lead Japan’s economy to overcome the deflation that has lasted for nearly 15 years.”

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