Bank of Japan injects £70bn in bid to tackle deflation

The Bank of Japan has announced a number of measures to help tackle deflation and stimulate the economy.

It will inject 10trn yen (£70bn) into the economy by means of offering banks cheap short-term loans to encourage lending to business and individuals.

Interest rates remained unchanged at 0.1% and the Bank says the measures will "firmly support Japan's economic developments toward recovery".

The Japanese government, which announced last month the country was in a "mild deflationary situation", welcomed the move, but analysts claim the amount of extra liquidity is negligible and argue the Bank's move was an attempt to take advantage of the "announcement effect".

A rise in the value of the yen, which makes the country's exports more expensive in global markets, is also affecting the economy.

The Bank of Japan's policy officials are meeting the country's cabinet on Wednesday to discuss the economy.