BOJ sets 2% inflation goal, pledged to ease monetary conditions

Bank of Japan building taken on Sep. 26. (Source: Reuters)

The Bank of Japan (BOJ) on Tuesday decided to set a two percent inflation goal and pledged to ease monetary conditions "decisively" at the conclusion of a two-day policy meeting.

The decision was in line with current Prime Minister Shinzo Abe 's call, so as to stimulate Japan's current stagnant economy.

The BOJ also released a joint statement with the government on fighting deflation, in which the government vowed to take growth strategies and restore fiscal health.

Meanwhile, the bank introduced an open-ended easing steps similar to those of the U.S. Federal Reserve, such as buying government bonds and other relatively safe financial assets from financial institutions without setting a deadline.

Japan's economy has contracted for a second straight quarter in the three months through September, shrinking an annualized real 3. 5 percent. Analysts say the economy has entered a mild recession amid sluggish demand both at home and abroad.

Abe, who took office on Dec. 26, has put pressure on the BOJ to carry out bold monetary easing plans until two percent inflation is achieved.