Tuesday, October 05, 2010

BOJ cut interest rates

BOJ unexpectedly cut the interest rates from around 0.1% to 0.0-0.1%, and decided to buy 3.5 trillion yen of government debts in today's monetary policy meeting. The markets reacted strongly to this news.

I'm sure that nobody believes this is going to mend Japan's chronicle deflation. BOJ only meant, "We did something, so the ball has been passed on to politicians to tackle the problem." Then, what are politicians going to do? Another round of fiscal expansion? Where is a revenue source? More debt issue?

All has been well heard in the last 20 years. The same policy, the same result. And nothing happened.

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