Tokyo - Arabstoday
The Bank of Japan boosted its bond-buying scheme by a further 10 trillion yen (Dh456.5 billion) yesterday and pledged to buy longer-term government debt in a move seen aimed at convincing both impatient politicians and investors of its resolve to pull the economy out of deflation. The central bank also kept expectations of more stimulus alive as it pledged to \"pursue powerful monetary easing\" to reach its 1 per cent inflation target, even as it nudged its growth and price forecasts for the coming years. The policy easing came at the top of an expected 5-10 trillon yen range and initially impressed markets, pushing the yen lower. But the yen later crept back up and stocks slipped as several market players saw the BoJ\'s decision to give itself more time to hit the bond-buying goal as a sign that central bankers themselves had doubts about how much good their action would do for the struggling economy. \"The leopard doesn\'t change its spots. It [the BoJ] doesn\'t view monetary accommodation as a cure capable of reversing Japan\'s deflation,\" said Tim Condon, chief Asia economist at ING in Singapore. \"They seem motivated by politics and political pressure in these last couple of moves ... so I think they will do the minimum that they feel they are forced to do.\" The BoJ\'s second easing in just over two months comes at a time when the economy is picking up and was seen mainly as symbolic response to politicians\' calls for more efforts in battling deflation that has dogged Japan for over a decade, depressing consumption and business investment. The first political reactions to yesterday\'s decision suggested the central bank may have only bought itself a little bit of time. Finance Minister Jun Azumi described the move as \"another bold easing step\", but also said he hoped the central bank would continue to take such steps. The main opposition party\'s shadow finance minister Yasutoshi Nishimura was more blunt, saying the BoJ had only done the minimum. \"It should have been more daring.\" In its semi-annual economic report released later in the day, the central bank raised its growth forecast for the current fiscal year to March 2013 to 2.3 per cent from 2.0 per cent seen in January. Data earlier yesterday also confirmed the world\'s third-largest economy was picking up, with March factory output rising at the fastest pace in three months, even though it undershot expectations. But consumer prices rose just 0.2 per cent in March from a year earlier in a sign Japan still had a long way to achieve the BoJ\'s 1 per cent target.