REUTERS - The Bank of Japan has led Prime Minister Shinzo Abe's effort to stimulate
the world's third-biggest economy, but its often innovative steps have yet to
end decades of falling prices and feeble growth.
To help explain what it all means, the Reuters graphics team has produced
an animated guide to the often bewildering world of QQE, YYC and other tricks
of the BOJ trade. (tmsnrt.rs/2igbqRk)
Deploying "quantitative and qualitative easing" (QQE) policies,
the BOJ has pumped a torrent of freshly minted yen into the economy, largely by
buying government bonds. The aim was to stoke inflation and encourage spending.
When that failed to ignite economic activity, the central bank early this
year imposed a negative interest rate, charging banks to park some of their
overnight cash. It hoped this would encourage lending.
This, too, didn't do the trick. So the central bank in September
pioneered "yield curve control" (YCC), an attempt to spur lending by
ensuring a gap between short-term interest rates where banks borrow and
long-term rates where they lend.
Whether the BOJ's latest steps will succeed, where years of unorthodox
policies haven't, remain a key question for 2017.
REUTERS
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