23 Jan 2013

Japan raises inflation target

7:10 pm on 23 January 2013

The Bank of Japan has announced its boldest effort yet to kick-start its economy.

The bank has agreed to double its inflation target to 2% and ease monetary policy, meeting key demands of Japan's new government, the BBC reports.

The central bank has guarded its independence and there were fears it may resist Prime Minister Shinzo Abe's calls for it to do more to help growth.

But the bank has gone further than many analysts predicted, offering to do open-ended asset purchases from 2014.

The measures are expected to pump billions of yen into the economy.

A New Zealand economist says Japan could have done more to help revive its ailing economy.

AMP New Zealand's chief economist Bevan Graham says the stimulus programme will lower Japan's currency and boost the competitiveness of its export sector in the short term.

But he says that will be constrained by the fact that global growth is still relatively soft.