Bank of Japan bows to pressure, announces new stimulus package

Nathan Andrada – Fourth Estate Cooperative Contributor

Tokyo, Japan (4E) – The Bank of Japan (BoJ) has announced its third round of monetary stimulus in four months in the run up to more intensified measures next year as the country’s next leader is poised for stronger efforts to battle deflation.

In a statement released Thursday in Tokyo, the central bank increased its asset-purchase program by 10tn yen to 76tn yen ($903bn). The BoJ also kept its credit lending program steady at 25tn yen.

The bank also decided to keep key interest rate from zero to 0.1 per cent and purchases of Japanese government bonds at 1.8tn yen per month, according to the statement.

Shinzo Abe of the opposition Liberal Democratic Party (LDP), which won a landslide victory during Sunday’s parliamentary election, said that he will order his government to work with the central bank to set a common inflation target as soon as he announces his cabinet on Dec. 26.

The LDP-New Komeito coalition won a two-thirds majority of the seats in the Diet, the country’s lower house, allowing it to overrule the upper house in many critical issues, which may include amending the law that guarantees the central bank’s independence from the country’s politicians.

Analysts think that the BoJ will have difficulty resisting political pressure especially just months before the bank undergoes several leadership changes. Central bank governor Masaaki Shirakawa is scheduled to step down on April 8, while two deputy governors will see their terms expire on March 19.

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