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On the recent changes in the Bank of Japan's Monetary Policy Framework

· Kazuo Ueda, Governor of the Bank of Japan (Japan)

Summary written by Dark Majestic in its own words · topics: monetary policy and interest rates, inflation and price stability

KU
· Kazuo Ueda Wiki · Bank of Japan WikiOn the recent changes in the Bank of Japan's Monetary Policy Framework

ContextRemarks at the Peterson Institute for International Economics in Washington; the Bank of Japan pursues price stability and has just ended negative rates and yield curve control.

Why it mattersUeda explains why Tokyo scrapped its yield cap and now steers a short-term rate.

Problems raised
  1. Japan's inflation expectations were stuck near zero.
  2. Firms were reluctant to raise prices.
  3. The old framework was complex.
Solutions proposed
  1. Replace yield curve control with a new framework.
  2. Use the short-term rate as the main tool.
  3. Build on changed price-setting behaviour.
Read full speech on bis.org ↗

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