Bank of Japan is trying some creative tactics to stem a flagging economy after more traditional methods produced only sluggish results. Japan’s central bank announced Tuesday, a move to lower its key interest rate to between 0% and 0.1%. It previously stood at 0.1%. The bank also said it would purchase about $60 billion of government bonds and other assets, to boost the pace of the country’s recovery.
For the first time, the central bank is investing in real estate investment trusts and stock funds. Bank of Japan Gov. Masaaki Shirakawa said that the $60 billion in asset purchases took the BOJ down a new road in accepting market risk. He added that that “if a central bank tries to seek greater impact from its monetary policy, there is no choice but to jump into such a world.”
The BOJ’s easing came the same day that Australia’s central bank withheld a widely expected rate increase. That, coupled with the projected Federal Reserve moves, shows central banks around the world are rapidly recalibrating to adjust to a suddenly weaker global economic outlook.
