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Japan pledges to 'beat deflation' | |
(about 9 hours later) | |
Japan's central bank has vowed to fight deflation as it announced interest rates would remain at 0.1%. | Japan's central bank has vowed to fight deflation as it announced interest rates would remain at 0.1%. |
"It is a critical challenge for Japan's economy to overcome deflation," the bank said in a statement. | "It is a critical challenge for Japan's economy to overcome deflation," the bank said in a statement. |
It added it "would not tolerate" annual price rises at, or below, zero. The consumer price index fell at an annual rate of 2.2% in October. | It added it "would not tolerate" annual price rises at, or below, zero. The consumer price index fell at an annual rate of 2.2% in October. |
The central bank promised to keep interest rates low, but did not specify how it planned to tackle deflation. | |
"They're trying to show that they are going all out to stop deflation," said Adrian Foster from Rabobank International in Hong Kong. | |
"This is aimed at reinforcing that the Bank of Japan and the finance ministry are in sync and that they don't want a stronger yen because of deflation." | |
Other analysts said the central bank would not take further action just yet. | |
"For the time being they will stand back, and be prepared to do something", said David Cohen from Action Economics in Singapore. | |
"They will feel obliged to take some steps if the economic situation deteriorates, but right now it's a mixed picture," he added. | |
Japan's economic recovery is not looking as strong as first thought. Earlier this month the government agreed a 7.2 trillion yen ($81bn; £48bn) stimulus plan to prevent the country's economy from slipping back into recession. | Japan's economic recovery is not looking as strong as first thought. Earlier this month the government agreed a 7.2 trillion yen ($81bn; £48bn) stimulus plan to prevent the country's economy from slipping back into recession. |
While most other major central banks are beginning to roll back their special measures to boost the economy, the Bank of Japan recently announced plans to expand it. | While most other major central banks are beginning to roll back their special measures to boost the economy, the Bank of Japan recently announced plans to expand it. |
Earlier this month, the central bank said it would inject 10 trillion yen ($114bn; £70bn) into the economy by offering banks cheap short-term loans, in order to encourage banks to lend more. |
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