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BOJ again implements zero-interest rate In order to counter the abrupt appreciation of the yen, the Bank of Japan on October 5 decided to implement monetary easing measures by lowering its key short-term interest rate to zero and establishing funds for purchasing not only government bonds but also speculative financial assets such as exchange-traded funds. This policy in essence supplies further funds to large corporations and big banks. Is this an appropriate policy to boost the Japanese economy? No matter how much the BOJ increases the money supply, such money will never circulate in real economic activities if conditions of the battered domestic economy remain unchanged. The United States already carried out similar measures. However, its real economy shows no sign of recovery. This BOJ policy may only end up fueling speculative moves. Whatfs required is a financial policy aiming to shore up the economy by diverting money to small- and medium-sized enterprises now experiencing increased hardships under the strong yen.
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