Japan central bank set to vow boldest action yet to lift economy
TOKYO (REUTERS) - The Bank of Japan (BOJ) is set on Tuesday to unveil its most determined effort yet to beat years of economic stagnation, but the big challenge will be how to impress markets already pricing in a doubling of its inflation target and further asset buying.
Under pressure from new Prime Minister Shinzo Abe for bolder action to overcome deflation and lift the economy out of recession, the central bank will issue a joint statement with the government pledging to pursue aggressive monetary easing to achieve a target for inflation of 2 per cent, a level achieved in only a handful of months since the late 1990s.
Such a pledge will keep the BOJ under political pressure to deliver economic stimulus steps beyond its regular policy prescription of the past few years of topping up an asset-buying and lending programme, analysts say.
"This will be a historical meeting for the BOJ that marks a big change in its policy framework, so the bank will be under pressure to deliver something new," said Mr Masaaki Kanno, chief Japan economist at JPMorgan Securities.