Wars and peace treaties, laws and political movements, monetary and real markets, bank profits and failures; institutional changes and power struggles; practical debates, among financiers, within the central bank, in Congress and in public opinion, reconstructed precisely and passionately; individual characters; and fascinating hypotheses on what might have happened if a given public figure had not died prematurely or if a given dispatch had been sent one day earlier.
In April 1999, the Bank of Japan (BOJ) not only reduced its call rate to within a few basis points of zero, it also announced its attention to keep the call rate at zero “until deflationary concerns are dispelled.” This policy, known as the zero-interest-rate policy, or ZIRP, was interrupted by a 25-basis point rise in the call rate in August 2000 but then effectively re-introduced in March 2001 in conjunction with the BOJ’s new policy of quantitative easing.10 The BOJ’s goal in committing to the ZIRP was to persuade participants in the Japanese bond market that short-term rates would remain low for longer than they had thought - a commitment that, if credible, should result in longer-term rates being lower than they otherwise would be.