Skip to main content

Bank of Japan green-lights new $119B stimulus

By Ramy Inocencio, for CNN
updated 6:50 PM EST, Thu December 20, 2012
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
updated 8:36 AM EDT, Mon August 18, 2014
Europe's deteriorating relationship with Russia has hit the region's growth, even before new food sanctions begin to bite.
updated 12:34 PM EDT, Wed July 16, 2014
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.
updated 9:24 AM EDT, Thu August 14, 2014
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?
updated 11:24 AM EDT, Sun July 20, 2014
Evidence points to pro-Russian separatists as perpetrators of the attack and Vladimir Putin is facing uncomfortable questions, David Clark writes.
updated 10:40 AM EDT, Tue August 5, 2014
The biggest Ebola outbreak in history is taking its toll in Western Africa, hitting some of West Africa's most vulnerable economies.
updated 5:02 AM EDT, Thu July 3, 2014
Macau has overtaken Switzerland in the wealth stakes, being named the world's fourth richest territory by the World Bank.
updated 10:47 AM EDT, Fri July 18, 2014
Saudi Arabian Bateel brand is best known for its delectable dates but it now has more than a dozen cafes and a new bakery in the works.
updated 7:00 AM EDT, Thu July 17, 2014
A British nanotech company has created what it says is the world's darkest material. It is so dark the human eye can't discern its shape and form.
updated 12:02 PM EDT, Wed July 16, 2014
Jibo robot is designed to be an organizer, educator and assist family members. CNN's Maggie Lake met him and says she was impressed with his skills.
updated 5:09 PM EDT, Fri July 18, 2014
American burger joints have sprung up all over London, but how to know which ones are best? CNN's Jim Boulden investigates.
updated 8:22 AM EDT, Wed June 18, 2014
Sandwiched in between Iraq and Syria, Jordan's destiny seems to be one of a constant struggle for survival. John Defterios explains.
updated 11:02 AM EDT, Wed June 18, 2014
At the last football World Cup, it was all about 3D. This time around, it's nothing less than 4K.
updated 6:58 AM EDT, Wed July 16, 2014
Bob Mazzer has photographed inside London's Tube network for 40 years. He's captured history.
updated 1:12 PM EDT, Fri July 18, 2014
Exotic animals are becoming a profitable business opportunity for Nicaraguan entrepreneurs. CNN's Rafael Romo reports.
updated 11:29 AM EDT, Fri June 13, 2014
Iraq produces 3.3 million barrels per day and has the world's fourth-largest oil reserves. But the current crisis is putting all this in danger.
updated 8:22 AM EDT, Wed June 18, 2014
Sandwiched in between Iraq and Syria, Jordan's destiny seems to be one of a constant struggle for survival. John Defterios explains.
updated 9:14 AM EDT, Mon June 16, 2014
The gas standoff between Russia and Ukraine could have a knock-on effect on Europe. Explore this map to find out why is the EU nervous.
updated 6:58 AM EDT, Wed July 16, 2014
Bob Mazzer has photographed inside London's Tube network for 40 years. He's captured history.
updated 8:06 AM EDT, Tue June 17, 2014
The UK capital promotes its tech stars and shows it can compete with Silicon Valley. Here are five companies that pitch to make it big.
ADVERTISEMENT