The yen languished at two-and-a-half year lows against the dollar on Friday following a dramatic selloff as markets positioned for the Bank of Japan to take bold policy action to tackle deflation.
Sources familiar with the BOJ’s thinking told Reuters the central bank, under relentless pressure from Prime Minister Shinzo Abe, will next week mull pledging to buy assets open-endedly until 2 percent inflation is foreseen.
Such a move would represent a marked turnaround for a conservative central bank that has repeatedly resisted calls for bold action. It would also far exceed expectations the BOJ would opt for a more conventional step of topping up its asset-buying program at its Jan 21-22 meeting.
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