Japan PM gets inflation goal, next on list, a new BOJ governor
In its most determined effort yet to end years of economic stagnation, the Bank of Japan said on Tuesday it would switch to an open-ended commitment to buying assets next year and double its inflation target to 2 percent.
It issued a joint statement with the government promising to reach the inflation goal "at the earliest possible time," drawing praise from Abe who had piled relentless pressure on the central bank to take bolder measures to pull Japan out of deflation and recession.
Although the scale of the measures was greater than markets had expected, investors were disappointed the open-ended buying, similar to a US Federal Reserve policy, would not begin until 2014. That suggested no extra stimulus measures this year.
But Bernd Berg, global currency strategist at Credit Suisse, suggested markets would soon switch their focus to the next stage of Abe's plan and that would keep the yen on a weakening path, a trend that has bolstered the stock market.
"The general upward move in dollar/yen will continue due to expectations of more easing after a new BOJ governor is appointed in April," he said.
Abe led his Liberal Democratic Party to a landslide victory in December elections and his campaign for aggressive budget and monetary stimulus had pushed the yen lower and sparked a stock market
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