1. Japan — Monetary Easing
- Author:
- Caspar Fithin
- Publication Date:
- 03-2001
- Content Type:
- Policy Brief
- Institution:
- Oxford Analytica
- Abstract:
- The Bank of Japan (BoJ) announced a new approach to monetary policy which effectively targets money supply growth and inflation on March 19. The BoJ has indicated that the immediate consequence of its measures to boost financial system liquidity will be to push short-term interest rates back to zero or virtually zero. It has pledged to maintain rates at this level until deflationary pressures are reversed and the consumer price index becomes positive. The BoJ's actions have the potential to lead to a revival in share prices, corporate activity and bank lending. If the initiative results in a sustained weakening of the yen, the economy may also benefit from stronger export growth. However, the effect of all of these measures will be blunted unless they are accompanied by the structural reforms which the government has for some time foreshadowed, but which have suffered from delay and indecision.
- Topic:
- Economics, Government, and International Trade and Finance
- Political Geography:
- Japan and East Asia