BoJ doubles inflation target to pump-prime economy

Japan's new prime minister Shinzo Abe extracted the first concession from the Bank of Japan (BoJ), with the central bank agreeing to double its inflation target to 2 per cent and switching to an open-ended commitment to asset purchases, helping to end years of stagnation and move aggressively to stimulate the country's slumping economy.

A joint statement issued by the government and the Bank of Japan said they would strengthen policy coordination in order to overcome deflation and achieve sustainable economic growth.

BoJ said it ''recognises that the inflation rate consistent with price stability on a sustainable basis will rise as efforts by a wide range of entities toward strengthening
competitiveness and growth potential of Japan's economy make progress.

''Based on this recognition, the Bank sets the price stability target at 2 per cent in terms of the year-on-year rate of change in the consumer price index.''

BoJ said it would pursue monetary easing and aim to achieve price stability target at the earliest possible time. It would also ensure there are no significant risks to the sustainability of economic growth, including from the accumulation of financial imbalances.

The government, meanwhile, offered to bring flexibility to managing macroeconomic policy and formulate measures for strengthening competitiveness and growth potential so as to revitalise Japan's economy.