At the end of last year, Japan’s new Prime Minister, Shinzo Abe, called for the BOJ to drastically loosen its monetary policy and to target 2% inflation--even before the start of official campaigning for the December 16 lower house election in which his Liberal Democratic Party won a landslide victory. Today, Kyodo news agency reported that Abe’s government and the BOJ will state an inflation target of 2% in their planned joint statement, to be released after the details are discussed at the BOJ's Policy Board meeting January 21-22.
Of course, the BOJ has been stepping on the monetary accelerator for quite some time. Reserve balances rose to a record 39.8 trillion yen during December of last year, up 142% during the latest round of quantitative easing over the last two years (Fig. 8). Abe’s goal seems to be to weaken the yen, thereby boosting both Japan’s exports and inflation. So far, he has succeeded in bringing down the yen relative to the dollar by 8.2% since December 4 (Fig. 9). January 10, 2013
Of course, the BOJ has been stepping on the monetary accelerator for quite some time. Reserve balances rose to a record 39.8 trillion yen during December of last year, up 142% during the latest round of quantitative easing over the last two years (Fig. 8). Abe’s goal seems to be to weaken the yen, thereby boosting both Japan’s exports and inflation. So far, he has succeeded in bringing down the yen relative to the dollar by 8.2% since December 4 (Fig. 9). January 10, 2013
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