Econintersect: The Bank of Japan (BoJ) has increased its quantitative easing (QE) program by another ¥10 trillion ($118 billion) in an effort to stem persistent deflation. The easing program has now expanded to nearly $1.2 trillion (¥101 trillion). According to the Financial Times, Japan may also raise its inflation target from its current 1% target. Both increased QE and a higher inflation target have been pushed by incoming prime minister Shinzo Abe.
The announcement by the BoJ came one day after the third largest trade deficit ever was turned in for November. That seems certain the push Japan deeper into recession in the fourth quarter. The country experienced two down quarters for GDP in the second and third quarters of the year. There are hopes that, after a slow start, 2013 may see growth return as monetary and fiscal actions weaken the yen and increase exports.
Sources:
- BoJ adds Y10tn to easing programme (Michiyo Nakamoto, Financial Times, 20 December 2012)
- Japan: Third Largest Trade Deficit on Record (GEI News, 19 December 2012)
