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Bank of Japan brings in third economy boost
Robert Lea18 Mar 2009
THE Bank of Japan is to embark on its third stimulus plan with a bout of so-called quantitative easing in a bid to shore up an economy which is contracting at a double-digit percentage rate.
The Japanese central bank said it is to buy 1.8 trillion yen (£13 billion) of government bonds a month in a bid to inject money into the country's economy.
"The [Japanese] government is mulling huge spending to bolster the economy," said Royal Bank of Scotland's chief Japan economist Junko Nishioka. "The BoJ's decision can be interpreted as an effective monetisation of government debt. Today's announcement shows the BoJ is doing more than what the markets expected to strengthen monetary easing."
A similar move was made this month by the Bank of England. Instead of printing more money to refloat the economy it too has embarked on quantitative easing by making more money available to banks and financial institutions by buying up their holdings of gilts.
