Amid limited fiscal space, most central banks in the region, with inflation well contained, cut policy rates to support the recovery process, with some bringing it down to historical lows. For instance, Ghana cut the policy rate by 150 basis points, South Africa 275 basis points, Uganda 200 basis points etc.
Moreover, with not only the Bank of Japan but many other central banks around the world currently having nearly exhausted conventional monetary policy means – that is, lowering short-term interest rates – responding to deflationary pressures and firmly stabilizing inflation expectations at the desired level represents an unprecedentedly difficult challenge.