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Japan’s Bank of Japan (BOJ) reportedly planned to loosen its monetary policy to boost its flagging economy.
The BOJ’s decision to tighten the policy could send jitters among investors, however, especially with a key election year around the corner.
Here’s what you need to know:
What is BOJ policy?
The BOJ is Japan’s central bank. It develops monetary policy to stimulate the Japanese economy and boost inflation.
According to its website, the BOJ tries to keep consumer prices from rising rapidly and stabilize monetary growth. It also aims to achieve stable financial markets and avoid asset bubbles.
Why could Japan’s BOJ tighten its monetary policy?
Japan’s economy grew at its slowest pace since the 1990s in the second quarter, according to a government report released on July 2.
Private consumption grew only 0.3% in the second quarter, the first decline in three years, while government spending remains flat.
In the aftermath of the global financial crisis, Japan’s economy has not recovered as quickly as the rest of the developed world.
Japan’s leadership is looking to boost growth.
According to the report, Japan’s leaders are looking to boost growth through infrastructure spending to create jobs.
In addition, Japan’s political parties are also proposing stimulus measures as
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