Report

TOE Alert: BOJ throws in the towel

posted by Richard Katz on September 21, 2016

Found in Japan, categorized in Monetary Policy

Tags: Richard Katz TOE BOJ

Report Cover

Headline

In short, it is time for the BOJ to admit that monetary policy is absolutely necessary, but not sufficient, to bring back lasting inflation.

Abstract

The keypoints of this report include,

- The Bank of Japan has abandoned the pretense that it can achieve its 2% inflation target in two years, or any other particular timeframe
In the face of pressure from private banks, it refrained from going more deeply into negative rate territory regarding bank reserves at the BOJ
In another so-called “new framework” it has switched its main operating target: from an increase in the monetary base to keeping 10-year bond yields at zero
The BOJ also issued a Comprehensive Assessment of why it failed to meet its 2% target, but there is not a lot of culpa in its mea culpa; it keeps insisting that its policy will eventually work
There is no talk of what is really needed: a fiscal-monetary combination

 

About Richard Katz

Richard Katz is Senior Fellow at the Carnegie Council for Ethics In International Affairs, the New York correspondent for Weekly Toyo Keizai, a leading Japanese business magazine, and formerly the editor of The Oriental Economist Report, a monthly newsletter on Japan.

Mr. Katz has taught about Japan’s economy as an Adjunct Associate Professor at the New York University Stern School of Business, and as a Visiting Lecturer in Economics at the State University of New York (SUNY) at Stony Brook.

Mr. Katz is the author of two books on Japan's economic travails and has just finished a third book on reviving entrepreeurship in Japan.

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