商务英语综合教程下册课件房玉靖主编 ISBN9787810789707Unit 9 The Monetary FocusI A Yen for Change.ppt

Unit Nine Introduction Central Banks around the world have been regulating their monetary policy weapons recently in an effort to combat a widely expected economic recession. This essay mainly discusses the changes of Japanese yen. Text 1 Central Banks around the world have been busily wielding their monetary policy weapons in recent weeks in an effort to counter a widely expected recession. After the terrorist attacks last month, the Federal Reserve and the European Central Bank were quick to cut nominal interest rates and to add liquidity. In Japan, where the economy is entering its second decade of stagnation, the rescue effort was less ambitious, aiming mainly at holding down the yen. Yet even that is a formidable challenge. 9 In the long run, the yen’s biggest enemy is Japan’s worsening price deflation, which now runs at about 1% a year. Deflation gives Japan painfully high real interest rates even though nominal rates are, in effect, zero. The recent interest-rate cuts by G7 countries only hurt the yen’s relative position: since Japan cannot trim rates any further, cuts by other countries make the yen even more appealing by comparison. The solution for the yen, as for the Japanese economy as a whole, is to halt deflation. 10 While the central bank, with its much-trumpeted unsterilised intervention, may be attempting to signal a new vigor in its monetary easing, this signal lacks the credibility needed to defeat deflation. After responding well to the announcement of a new policy initiative, economists are starting to question whether the Bank’s bite lives up to the bark. There is uncertainty both about how ling the new liquidity will stay in the system and more fundamentally, whether the intervention was as unsterilised as first thought. Certainly, the Bank has not moved explicitly to a new policy of expanding the money supply. 1. Central Banks around the world have been busily wielding their monetary policy weapo