Japan’s still negative neutral rate points to a very slow exit from ultra-lax policy by BoJ
The Bank of Japan (BoJ)’s monetary policy has been an outlier among major global central banks. It was not only the last central bank to end the unconventional monetary policy tools but also the first one to actively use those tools from the 90s.With declining neural rate, the BoJ confronted the zero nominal lower bound, a belief that the policy rate cannot fall below 0%, when the economy suffered from a prolonged deflation. In fact, our latest Cross-Expertise* revealed that Japan’s neutral rate remains negative even if much less than in the past, and still the lowest among developed economies...