TOKYO: The Bank of Japan ramped up its vast monetary easing programme on Friday — sending the yen plunging and stocks soaring — in a surprise move aimed at reviving growth just as the Federal Reserve winds down its own stimulus spree.
Speaking after the central bank wrapped up its latest policy meeting, BoJ chief Haruhiko Kuroda said the fresh measures were crucial to keeping Japan on track in its war on deflation, and hinted more policy moves could follow.
“The Japanese economy is now at a critical moment in the process of getting out of deflation,” he told reporters in Tokyo, adding that the BoJ would “not hesitate” to pull the trigger on more easing if necessary.
Policymakers said they would inflate the central bank’s asset-buying stimulus plan by as much as 20 trillion yen ($182 billion), bringing it to an eye-popping 80tr yen annually.
The BoJ also slashed its economic growth forecast by half, and trimmed consumer price expectations as a much-touted inflation target looked increasingly out of reach while Tokyo’s bid to kick-start the economy stalls.
The yen dived below 111 against the dollar, levels not seen since January 2008, following the announcement while Tokyo’s Nikkei 225 stock index soared more than five per cent to a seven-year high.
The move is the first since Japan’s central bank launched its huge bond-buying scheme in April last year as a cornerstone of Tokyo’s wider plan to jumpstart the world’s number three economy.
Friday’s decision throws into focus the sharp contrast of fortunes for the US and Japanese economies after the Federal Reserve on Wednesday brought an end to six years of bond-buying and considers an interest rate hike.
“Just when the Fed takes the punch bowl off the table, the BoJ arrives with a case of sake,” said Jonathan Sudaria, a broker at London Capital Group.
UK-based CMC Markets added that the BoJ’s move was “filling the void left by the US central bank”