Bank of Japan Pushing on a String as Shrinking Economy Needs Tow
This article is for subscribers only.
Just as the Bank of Japan most needs to revive a contracting economy, the effectiveness of its monetary policy is at a record low.
The money multiplier, a gauge of activity generated when the central bank eases, fell to 3.92 last month, the lowest in data dating back to 2003. That’s even as BOJ debt purchases of as much as 12 trillion yen ($97 billion) a month caused the monetary base to balloon about 150 percent. The phrase “pushing on a string” was adopted during the 1930s Great Depression to describe the difficulty in reviving demand with fund injections.