Dollars and Jens
Wednesday, February 21, 2007
Japanese interest rates
The Bank of Japan raised short-term interest rates to 0.5%, less than a year after the cessation of "quantitative easing" in which banks were more or less simply handed as much money as they could lend out. I haven't been paying as much attention to the Japanese economy as the Bank of Japan has — or, if I have, we're all doomed — and this came as a bit of a surprise to me, though it probably shouldn't have; the short end of the Japanese yield curve has been at 50bp pretty much since the first hike (to 0.25%). My feelings at the time, though, were that "not zero" is enough different from "zero" that might be good to leave it at 25bp for a while. (And, in fairness, they did for about six months.)

Inflation there is within the margin of error of zero, incidentally.

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