Deflation Cure....Inflation

The Bank of Japan set a 2 percent inflation target and will shift to Federal Reserve-style open-ended asset purchases in its strongest commitment yet to ending two decades of deflation. The central bank will buy about 13 trillion yen in assets per month from January 2014, including about 2 trillion yen in Japanese government bonds and about 10 trillion yen in treasury bills.

This drive for looser monetary policy and a weaker yen may put the central bank’s independence at risk and increase tensions with trading partners, particularly South Korea and China.