Japan central bank revamps policy to boost economy

Sunday, April 07, 2013

Print this page Email A Friend!




TOKYO, Japan (AP) — Japan is taking aggressive action to lift consumer prices, encourage borrowing and help pull the world's third-largest economy out of a long slump.


Like the US Federal Reserve, Japan's central bank plans to flood its financial system with more money — its most far-reaching step to date to get consumers and companies to borrow and spend.


The Bank of Japan's action will also drive down the value of the yen. A cheaper currency will make Japanese goods — from Toyota cars to Sony TVs — less costly for Americans and other foreigners. And it will make US and other exports more expensive in Japan.


The move comes as major central banks around the world are acting to stimulate their economies. On Thursday, European Central Bank President Mario Draghi said the ECB is considering doing more to shore up the ailing economy of the euro alliance. The ECB left its benchmark interest rate unchanged at 0.75 per cent, but Draghi said an interest rate cut was discussed Thursday.


Draghi also said the central bank is considering "various tools" beyond lower rates in case Europe's economy needs more help.


And the US Fed has said it expects to keep short-term rates at record lows at least until unemployment falls to 6.5 per cent from the current 7.7 per cent. The Fed also plans to continue buying US$85 billion a month in bonds indefinitely to keep long-term borrowing costs down.


"The central banks are being more activist than we've seen in decades," said Timothy Duy, an economist at the University of Oregon. "One central bank after another has to do more because economies aren't improving as fast as would have been expected."


Dan Akerson, CEO of General Motors Co, told CNBC that he feared the Bank of Japan's policies would give Japanese automakers a price advantage over GM in the United States.


"They're an export economy," Akerson said. "You have to be suspicious of what they're doing and why."


But many economists say the rest of the world will benefit, too: A faster-growing Japan will buy more products and services from the United States, China and Europe, helping boost their economies.



Now you can read the Jamaica Observer ePaper anytime, anywhere. The Jamaica Observer ePaper is available to you at home or at work, and is the same edition as the printed copy available at http://bit.ly/epaperlive


ADVERTISEMENT




POST A COMMENT

HOUSE RULES

1. We welcome reader comments on the top stories of the day. Some comments may be republished on the website or in the newspaper � email addresses will not be published.

2. Please understand that comments are moderated and it is not always possible to publish all that have been submitted. We will, however, try to publish comments that are representative of all received.

3. We ask that comments are civil and free of libellous or hateful material. Also please stick to the topic under discussion.

4. Please do not write in block capitals since this makes your comment hard to read.

5. Please don't use the comments to advertise. However, our advertising department can be more than accommodating if emailed: advertising@jamaicaobserver.com.

6. If readers wish to report offensive comments, suggest a correction or share a story then please email: community@jamaicaobserver.com.

7. Lastly, read our Terms and Conditions and Privacy Policy



comments powered by Disqus
ADVERTISEMENT

Poll

ADVERTISEMENT
ADVERTISEMENT

Today's Cartoon

Click image to view full size editorial cartoon
ADVERTISEMENT