Japan today approved an $11 billion stimulus package to tackle deflation and shore up a recovery threatened by the surging yen, as the government heaped pressure on the central bank to do more.
The previously announced plan, approved today by the cabinet of Prime Minister Naoto Kan, includes initiatives to boost consumption and employment for graduates, invest in green industries and offer support for small business.
The fresh stimulus package of 915 billion yen ($10.9 billion) will be financed by reserve funds, and is expected to lift the country's gross domestic product by about 0.3%, creating around 200,000 jobs.
The plan also identifies the yen's current strength as 'a problem that cannot be unaddressed', stating that the government 'will take determined action, including intervention, when needed.'
The government today increased pressure on the Bank of Japan to take additional easing measures by saying it 'expects the central bank to take further necessary policies'.
The central bank has held its key rate at a super-low 0.1% since the height of the financial crisis. It recently expanded a multi-billion dollar loan scheme in a bid to help the economy combat the impact of a strong yen.
Revised data today showed Japan's gross domestic product grew by an annualised 1.5% in the April-June quarter, well above an initial estimate of 0.4%.
