Bank of Japan Governor Haruhiko Kuroda said on Tuesday that the ultra-low interest rates created by the central bank under his rule makes fiscal spending more powerful. There is a global debate on whether governments need to step in to do more to support their economies instead of relying on central bank adjustments.
BoJ and government policy
Kuroda explained that the BOJ was not considering additions to its stimulus in tandem with a form of government spending package. However, he accepted that a policy mix was more effective in reviving the economy.
“If fiscal policy becomes more aggressive with interest rates at appropriately low levels and continued easing in place under the current yield curve control policy in an overall policy mix, fiscal policy will be more effective,” Kuroda said.
Iran doubles atomic efforts
Iran on Monday ignored another part of the 2015 nuclear deal by doubling the number of advanced atomic centrifuges it operates. The advanced centrifuges can in one year help Tehran have enough material for building a nuclear weapon — if it wants. The decision follows US President Donald Trump’s withdrawal from the agreement more than a year ago.
The United States issued on Monday new sanctions on nine people close to Iran’s supreme religious leader Ayatollah Ali Khamenei, including one of his sons.
“Our action is specifically focused on further targeting the financial assets of the supreme leader’s inner circle of both military and foreign affairs advisors,” a Trump administration official told Reuters.
China cuts rates
The People’s Bank of China (PBOC) slashed on Tuesday the interest rate on its one-year medium-term lending facility (MLF) loans by 5 basis points to 3.25% for the first time in over three years, as monetary policymakers and politicians in the world’s second-largest economy prepare measures to counter the effects of a slowing economy and ongoing trade war with the US.
Xi urges against protectionism
China’s President Xi Jinping said on Tuesday that global trade barriers had to be removed, and nations should uphold basic multilateral trade principles and practices while opposing protectionism. Xi was speaking at the opening of the China International Import Expo that started Tuesday to increase foreign investment in China and Chinese assets.
Xi’s remarks came amid strong signals by the US that the two economies were close to finalizing a so-called Phase-1 trade agreement. Beijing said on Monday that Xi and Trump have been in continuous touch through “various means.”