The Bank of Japan is now considering whether to move to balance sheet expansion in its bid to lift the Japanese economy out of deflation. Japanese policy, which will then further tighten the nexus between fiscal and monetary policy, is now the furthest along the path toward the consolidated fiscal and monetary approach that is occurring nearly everywhere in the crisis currency zones.
According to Reuters, the latest considerations are something that Japanese central bankers are discussing ahead of the shift in leadership that sees Haruhiko Juroda take over the helm.
"The BOJ's current policy is still about controlling interest rates. Shifting that focus to balance sheet expansion will open up a lot of possibilities in terms of policy options," said one of the sources.
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Edward Harrison is the founder of Credit Writedowns and a former career diplomat, investment banker and technology executive with over twenty five years of business experience. He has also been a regular economic and financial commentator in print and on television for the past decade. He speaks six languages and reads another five, skills he uses to provide a more global perspective. Edward holds an MBA in Finance from Columbia University and a BA in Economics from Dartmouth College.