To: Yorikke who wrote (3507 ) 3/21/2001 11:31:26 PM From: John Pitera Read Replies (2) | Respond to Life in Japan???--------Japan's Easing of Monetary Policy Sends Investors Back to the Market Foreigners who had shunned Japan were among the big buyers, amid hopes that the government will finally do more to get Japan's economy moving , but deep skepticism remains over the future of the nation's banking system.overnight interest rates fall to virtually zero, and keep doing so until consumer prices start rising again. The bank's about-face -- it had raised rates just seven months earlier and repeatedly rejected calls to set an inflation target -- cheered investors who are worried about Japan's price deflation. The move also increased the pressure on Japan's politicians, who were urged by Bank of Japan Gov. Masaru Hayami to accelerate structural reforms as a quid pro quo for his easing of credit. Nikkei's seventh-largest rise in percentage terms. Shares jumped across the board as investors shrugged off the overnight fall in U.S. stocks. Market suspicions -- unconfirmed -- that the government was buying stocks also helped spur buying, traders said. Even companies that are usually seen as resistant to cyclical swings in the economy showed strong gains. Takeda Chemical Industries Ltd., Japan's top pharmaceuticals company, rose 12.2%. is a form of "quantitative easing" -- an unorthodox approach that Japan's central bankers had previously shunned out of fear that it could lead to a loss of confidence in Japan's currency and prompt hyperinflation. That isn't happening, so far at least, in part because the Bank of Japan has shunned more extreme forms of quantitative easing, such as directly underwriting issues of government bonds. Despite downgrades of the nation's creditworthiness by foreign rating agencies, confidence remains strong in Japanese government debt -- perhaps too strong, since commercial banks have tended to invest their cash in government bonds rather than lending it to businesses.
