Bank of Japan set to launch war on deflation
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Dramatic policy changes at the Bank of Japan are likely to start moving from rhetoric to reality Thursday, as the country makes an ambitious bid to reverse persistent deflation.
Newly installed Prime Minister Shinzo Abe has made the central bank's 2% inflation target a top political priority. His directive: "Everything possible" must be done to achieve the goal within two years.
Abe has argued forcefully that the central bank has not done enough to stimulate Japan's flagging economy -- and made that a centerpiece of his election campaign. He favors aggressive policy moves to drive down the value of the currency, which could push consumers to spend more and save less.
The idea is that further easing, combined with more government spending on economic stimulus, could push up prices and end years of deflation, leading to more robust growth for the world's third largest economy.
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