The Bank of Japan hopes to encourage lending at financial institutions by doubling to 20 trillion yen (US$220bn), the amount of cheap, short-term loans it offers lending institutions. The Bank will lend to retail banks at 0.1 percent, in an attempt to combat deflation which, once again, threatens the Japanese economy.
Japan first struggled with deflation following the collapse of the housing market in the late 1980s. This triggered a collapse in the stock market and an overall devaluation of consumer prices. It took years for the economy to recover and the 1990s has long been referred to as the “lost decade”.
Source: BBC News
This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.