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Why BOJ, ECB should follow the Fed's lead

Ultra-low interest rates have proven themselves to be ineffective

| Japan
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While the Fed plans to increase the federal funds rate even further, the ECB and BOJ continue to snap up assets.   © Reuters

The central banks of the large industrialized countries are heading in different directions. The U.S. Federal Reserve Bank terminated its quantitative easing program in 2014 and plans to further increase the federal funds rate beyond the current level of 0.66%. In contrast, the Bank of Japan continues buying 7.7 trillion yen ($68 billion) worth of assets per month. The BOJ's current target value for 10-year government bond yields is 0%; its key policy rate stands at -0.1%.

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