Kinyuseisaku: Monetary Policy in Japan (B)
Posted: 21 May 2009
Date Written: March 27, 2009
Toshihiko Fukui, Government of the Bank of Japan, faced a complex situation in the fall of 2007. An economic recovery had allowed the central bank to abandon its zero interest rate policy, which had been in place for years, and raise rates to 0.5%. The Bank of Japan was eager to increase them to more 'normal' levels to exert effective monetary policy. Yet the appropriate timing and approach was a controversial issue, especially as the government did not want a rate hike that could potentially hinder economic growth and increase its already large fiscal debt burden.
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