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The unthinkable
FT Alphaville — ... easing can happen even if the fed funds rate is not brought down to zero. In otherwords, the kind of quantitative easing initiated by Japan in 2001, when the country’s central bank started targeting excess reserves (”current account balance”) and added whatever reserves were necessary by buying Japanese government bonds to keep the balance high. While this engendered a decent degree of enthusiasm from the market (see for instance, Pimco’s explanation and appraisal of the policy, here ), it can also be a risky move. In effect, the central bank is risking inflation to keep ...

Japan Stuck, Quantitative Easing in the US Next
[ The Financial Ninja ] — ... Tomoya Masanao Discusses the End of Japan's Quantitative Easing: In March 2001, the Bank of Japan (BoJ) began an historic new monetary policy known as “quantitative easing” in an effort to revive Japan’s economy and end the deflationary decline in consumer prices. Five years later, on March 9, the BoJ ended the quantitative easing policy, satisfied that the Japanese economy was on the path to stable, reflationary growth. In the interview below, Tomoya Masanao, PIMCO’s head of portfolio management in Tokyo, discusses why the BoJ ended quantitative easing and what he ...

The Deflation Scare
Moon of Alabama — ... Again what I see going on here is an engineered campaign to talk of deflation where inflation is only decreasing from too high levels. The Fed, in my theory, will then uses this deflation-scare to lower the Fed rate to zero and to adopt "unusual" measures like quantitative easing which is the method the Bank of Japan used to prop up the bankrupt Japanese banking system. ...