Skip to main content

Bank of Japan green-lights new $119B stimulus

By Ramy Inocencio, for CNN
December 20, 2012 -- Updated 2350 GMT (0750 HKT)
STORY HIGHLIGHTS
  • Bank of Japan votes to unleash nearly $119 billion in a new monetary stimulus
  • Initiated to help Asia's second-largest economy combat chronic deflation
  • Shinzo Abe, expected to be named the country's new PM, calls for 2% inflation target

Hong Kong (CNN) -- In a unanimous decision, the board of Japan's central bank voted to unleash 10 trillion yen, or nearly $119 billion, in a new monetary stimulus Thursday -- a widely-expected move to help Asia's second-largest economy combat chronic deflation.

The Bank of Japan's latest round of monetary easing, which comes after a two-day policy meeting, means a total of 101 trillion yen, or $1.2 trillion, have been poured into the country's asset-purchase and loan programs.

In a statement, the BOJ said it "recognizes that Japan's economy faces the critical challenge of overcoming deflation as early as possible and returning to the sustainable growth path with price stability. This challenge will be met through the combination of efforts by a wide range of economic agents to strengthen the economy's growth potential and support from the financial side."

The Bank of Japan added it would also review its current inflation goal, which currently stands at 1%.

Shinzo Abe, the leader of Japan's Liberal Democratic Party, has strongly called for a 2% inflation target. Abe, a conservative whose party won landslide parliamentary elections last week, is widely expected to be named prime minister on December 26 after serving one year in the position from 2006 to 2007. He has also put Bank of Japan governor Masaaki Shirakawa on notice that he wants to replace him with someone who will aggressively work to achieve a 2% inflation goal, according to Japanese media reports.

Shirakwawa's five-year term ends in April.

In the run-up to last weekend's parliamentary elections, Abe had campaigned for his party on a platform advocating unlimited monetary easing to jump-start the economy. From mid-November through election day, investors betting on an Abe administration had pushed the Tokyo Nikkei up nearly 12.5%.

But many in Japan are concerned that consistent monetary easing -- with Thursday's injection being the third boost in four months -- "might be a nice short-term fix," according to CNN's Tokyo correspondent Alex Zolbert.

He added that Japan needs "long-term structural reforms" that address overhauling the pension system, health care and Japan's once-profitable corporate giants like Sony and Panasonic, which hemorrhaged a combined $20 billion in their last fiscal years.

ADVERTISEMENT
Part of complete coverage on
September 24, 2014 -- Updated 1414 GMT (2214 HKT)
Liberia, Sierra Leone and Guinea -- the three countries facing the biggest health crisis -- are also facing huge bills to try and contain the virus.
September 22, 2014 -- Updated 1316 GMT (2116 HKT)
Twitter has lost its position in the top 20 coolest brands for the first time in three years.
September 25, 2014 -- Updated 1554 GMT (2354 HKT)
As the crisis in Iraq escalates, CNN looks at how Iraq could crack down on ISIS' oil riches under the guidance of its new oil minister, Adel Abdul Mahdi.
August 29, 2014 -- Updated 0842 GMT (1642 HKT)
Recep Tayyip Erdogan is Turkey's new president . So can he revitalize its economic fortunes?
September 19, 2014 -- Updated 1724 GMT (0124 HKT)
Experts share their tips on cities they see as emerging financial hubs...they're not where you think.
September 19, 2014 -- Updated 1340 GMT (2140 HKT)
Growing numbers of us are willing to serve as bank, teacher or travel agent to people we have never met, and entrust them to serve us in turn.
August 28, 2014 -- Updated 1244 GMT (2044 HKT)
The European Union is stepping in to save its dairy from going sour.
August 18, 2014 -- Updated 1236 GMT (2036 HKT)
Europe's deteriorating relationship with Russia has hit the region's growth, even before new food sanctions begin to bite.
July 16, 2014 -- Updated 1634 GMT (0034 HKT)
With cyberattacks on the rise and here to stay, it's a modern-day challenge for people and businesses to get smarter about preventing them.
August 14, 2014 -- Updated 1324 GMT (2124 HKT)
Airstrikes, rebels seizing control of oil fields, plus a severe refugee crisis are a recipe for market panic. So why are Iraq oil prices stable?
September 19, 2014 -- Updated 1124 GMT (1924 HKT)
Peer-to-peer finance lets businesses bypass bank loans. Creative companies with quirky ideas find new lending models advantageous.
July 20, 2014 -- Updated 1524 GMT (2324 HKT)
Evidence points to pro-Russian separatists as perpetrators of the attack and Vladimir Putin is facing questions, David Clark writes.
September 3, 2014 -- Updated 0952 GMT (1752 HKT)
CNN's Jim Boulden looks on the future of online shopping.
August 5, 2014 -- Updated 1440 GMT (2240 HKT)
The biggest Ebola outbreak in history is taking its toll in Western Africa, hitting some of West Africa's most vulnerable economies.
ADVERTISEMENT