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Foreign Central Banks

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The policy settings of the four major central banks remain unchanged. The Bank of Japan has brought its supply of current account balances within the target range after overshooting it to accommodate special liquidity needs. Throughout the bank’s balance-targeting period, variations in supply have been reflected almost entirely in variations in excess reserves. The adage, “you can lead a horse to water, but you can’t make it drink” seems to apply—although, in this case, the horse might become thirsty eventually. Cautious optimism has crept into official views of Japan’s economic outlook, though the weakening dollar may be tempering that view.

Suggested citation: "Foreign Central Banks," Federal Reserve Bank of Cleveland, Economic Trends, no. 02-07, pp. 18, 07.01.2002.

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