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Bank of Japan’s Ueda can’t quit QE, either

BOJ leaves policy rate steady amid feverish market speculation it was poised to finally move away from negative interest rates

by William Pesek December 19, 2023December 20, 2023

Japan's yen could be headed for 160 to the dollar. Image: Facebook Screengrab

The Bank of Japan’s decision to leave interest rates unchanged on Tuesday (December 19) has more to do with events in 1999 than 2023.

Twenty-four years ago, the BOJ became the first major central bank to slash borrowing costs to zero. Over the next two years, in 2000 and 2001, it pioneered quantitative easing (QE).

Two-plus decades of free money has a way of warping economic dynamics. Over time, Japan gave new meaning to the concept of “economic capture” as the public and private sectors grew dependent upon QE.