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An animated guide to the BOJ's long struggle to get Japan growing

Tuesday, December 27, 2016 - 04:02

An animated graphic explains the tactics used by the Bank of Japan to boost the country's stagnant economy.

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An animated graphic explains the tactics used by the Bank of Japan to boost the country's stagnant economy. SHOWS: GRAPHICS (RECENT) (REUTERS - ACCESS ALL) 1. ANIMATED GRAPHIC EXPLAINING THE TACTICS USED BY THE BOJ TO BOOST THE COUNTRY'S ECONOMY STORY: The Bank of Japan has been at the forefront of Prime Minister Shinzo Abe's effort to stimulate the world's third-biggest economy, but four years of radical steps have yet to decisively end decades of falling prices and feeble growth. Deploying a "quantitative and qualitative easing" (QQE), the BOJ has been printing huge amounts of yen and pumping them into the economy, largely by buying government bonds, in a bid to stoke inflation and encourage spending. When that failed to ignite economic activity, the central bank early this year imposed a negative interest rate, charging banks to park some of their overnight cash - hoping this would encourage them to lend the money on and boost growth. This too didn't do the trick, so the central bank in September pioneered "yield curve control" (YCC), an attempt to help banks and spur lending by ensuring a gap between short-term interest rates where banks borrow and long-term rates where they lend. The bank is maintaining the negative overnight rate, anchoring the 10-year bond yield around zero and letting longer-term rates drift higher. Whether the BOJ's latest steps will succeed where years of unorthodox policies haven't remain a key question for 2017. Between negative rate policy, QQE and YCC, keeping pace with the BOJ's struggles in the world's third-biggest economy can be difficult. To help explain what it all means the Reuters graphics team has produced this animated guide.

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An animated guide to the BOJ's long struggle to get Japan growing

Tuesday, December 27, 2016 - 04:02