In a policy shift, the Bank of Japan has decided to give more weight to commercial banks' reserves in adjusting its monetary policy than to interest rates.
At its March 19 policy-setting meeting, the BOJ decided to bring overnight interest rates effectively back to zero by setting a higher target for the reserves in its current accounts. In effect, the BOJ is aiming to provide interbank lending markets with nearly interest-free money.
Apparently with an eye to growing calls for steps to keep prices from falling further, the BOJ said the new policy measures will remain in place until the consumer price index registers a stable zero percent or a year-on-year increase.