BoJ buys back more bonds

THE Bank of Japan today agreed to pump money into the world's second-biggest economy in an effort to prevent it spiralling further out of control. After months of intense political pressure, the bank decided to ease its monetary policy and buy back large amounts of bonds.

The promise was swiftly followed by a government forecast that the country faces zero growth this year, a figure likely to be greeted with scepticism by foreign analysts who predict that the country's economy will contract for a second year.

The bank's board said it would raise its monthly purchases of long-term government bonds from 600 trillion yen a month to 800 trillion yen (£4.5bn).

It also plans to more than double the amount of funds in BoJ current accounts to as much as 15 trillion yen (£85bn) and widen the range of financial instruments it will accept as collateral on money market operations.

None of the moves was seen as radical in Tokyo. 'The measures we have taken are aimed at securing stability in financial markets and helping an economic recovery from the monetary policy side,' the BoJ said.