(Short Note 1) New Steps for Monetary Easing: What is Significant?
March 19, 2001
Bank of Japan
New Procedures for Money Market Operations
- The same benefit of the "Zero Interest Rate Policy" can be expected while leaving room for a market mechanism
- Volatile interest rate fluctuation can be avoided by the "Lombard-Type" lending facility
Strong Commitment in terms of Policy Duration
- The new procedures continue until the CPI (excluding perishables) registers stably a zero percent or an increase year on year
- Affect people's expectation to remove a deflationary bias
- Fall in interest rates across the yield curve
More Effective Market Operations with a Clear Ceiling to Secure Discipline
- In order to provide funds smoothly, increase the amount of outright purchase of the long-term government bonds if necessary
- Secure the credibility of the monetary policy by establishing a ceiling for the purchase set at the outstanding amount of bank note issuance