The Central of Japan has decided to take additional easing measures on Thursday after the unusually strong campaign of the new prime minister, who is trying to strengthen the fight against deflation.
The Central bank decided to increase the size of its program of asset purchases – the main instrument of monetary and credit liberalization, together with interest, which are already close to zero – and promised to consider the current target levels of inflation at its next meeting in late January. Abe’s party had a creditable victory in Sunday’s election and he will be elected for prime minister next week. Inspired by the election victory of his party, Abe asked the Central Bank of Japan to tighten up its objectives.
In particular, on Thursday the Bank of Japan voted unanimously to expand the program to purchase assets of more than 10% – with 10 trillion yen to 101 trillion yen.
On its announcement, the Bank of Japan said that one of the board members had wanted more extensive actions, offering reduction of interest rates on excess reserves to zero from the current 0.1 percent. This proposal was rejected by eight to one. Abe made a similar proposal during his campaign.