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Wednesday, 6th October 2010
In Business In Japan,

Bank announces quantitative easing

The Bank of Japan has revealed plans to increase liquidity in the country's economy.

According to the bank, the new measures could see asset buying of 5,000 billion yen (£37.6 billion) as part of a monetary easing approach to aid recovery within the financial system.

It was also announced that the Bank of Japan would lower the key interest rate to almost zero from 0.1 per cent in order to tackle deflation in the economy. In addition, the bank lowered the overnight call rate target to between zero per cent to 0.1 per cent – its lowest level since 2006.

Bank of Japan's governor Masaaki Shirakawa explained the policy is vital and the quantitative easing programme could be further extended to gain the right results.

He added: "It will take a certain period of time for it to have an effect so we'll thoroughly examine it."

The central bank's action led the Nikkei index in Tokyo to end the day up 1.5 per cent.

Written by Mark Smith.

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