How Bank of Japan Moved Ben Bernanke’s Cheese

The Bank of Japan has essentially taken Ben Bernanke's advice to set the price of cheese. By ANJANI TRIVEDI
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When former Federal Reserve Chairman Ben Bernanke was in Japan in July, speculation mounted that he had come to recommend Japanese officials employ “helicopter money,” or fiscal expansion funded by the central bank.
Turns out, he may have been discussing something similar to what Bank of Japan Governor Haruhiko Kuroda actually delivered on Wednesday: a World War II-era way that U.S. monetary policy targeted longer-term interest rates. In a blog post in March this year, Mr. Bernanke laid-out how targeting long-term rates is difficult but can send powerful signals.
Suppose the government is looking to boost the price of cheese, Mr. Bernanke mused. It has two options: buy wheels of the stuff, and let the market price it, or set a price and buy what’s needed to defend the price. Mr. Kuroda has essentially decided to set the price of cheese.
Such “exotic policy tools,” as Mr. Bernanke calls them, can influence inflation expectations, something Gov. Kuroda would like to boost. Mr. Bernanke noted there are ultimately limits to what can be achieved and there are risks about “losing control of the balance sheet.” Let’s hope Mr. Kuroda took home that advice too.
 
Source: WSJ
Link: http://blogs.wsj.com/moneybeat/2016/09/21/how-bank-of-japan-moved-ben-bernankes-cheese/
 

Mirá También

Así lo expresó Domingo Possetto, secretario de la seccional Rafaela, quien además, afirmó que a los productores «habitualmente los ignoran los gobiernos». Además, reconoció la labor de los empresarios de las firmas locales y aseguró que están «esperanzados» con la negociación entre SanCor y Adecoagro.

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