Japan's central bank launches unprecedented monetary easing program

Since the return to power of Japanese Prime Minister Shinzo Abe, speculation in the Asian nation's political circles has run rampant regarding the use of the Bank of Japan, the country's central bank, to help stimulate the economy further.  Some financial experts have argued that Japan's 15-year deflationary malaise can be combated by spurring inflation, but Bank of Japan officials have been hesitant to do so – until now.

According to various media reports, the Japanese central bank will be launching a massive monetary easing program that will effectively double the yen-denominated money supply within the next two years. Ostensibly, the goal is to bring about an inflation rate of 2 percent, but some economists predict benefits for the country's troubled real estate market as well.

Stock exchanges in Japan reacted positively to the news, with both prices and futures rising significantly as the yen dropped in value. It has been the persistent rise in the currency's value against other lenders that originally spurred Abe's push for more easing.

Haruhiko Kuroda, the Bank's governor, said during a press conference that central bank officials remain ready to alter the conditions of their program if the economy improves or deteriorates. 

"Incremental steps of the kind we've seen so far weren't going to get us out of deflation," Kuroda said. "I'm certain we have now adapted all policies we can think of to meet the 2 percent price target."

It's tough to predict how the initiative will pan out given the uneven success of other monetary easing programs conducted in the past five years. By intentionally creating inflation, the Bank of Japan runs the risk of losing control over the value of the Japanese currency.

Investors in Japanese assets or liabilities should reevaluate their portfolios to make sure that they will perform given the environment change. Wealth preservation methods are always encouraged, especially if they provide a solid hedge against potential losses. To learn more, visit GreatWealthStrategies.com today and download a "Free Game Plan Report."