The Bank of Japan has made a economic projection that has at least a bit of cautious optimism.  While it is not declaring the recession entirely over, the BOJ kept rates at 0.10% and has extended added liquidity measures through December.  Technically, there was a downgrade of the outlook of the 2009 economy.  But the hint of a recovery is close.

What is interesting is that the BOJ is essentially calling for a recovery, but  it is keeping the trump cards handy just in case.  In the address, the BOJ said the economy is heading for a recovery.  But the BOJ wants to examine whether this trend will continue after three months.

What the BOJ is really telling you is that this is still a notion of “Less-Bad” ahead.  It might not even be cautious optimism.  It might be hopeful pessimism.

It used to be that America made fun of the near-zero rates that the Japanese government pays for its bonds.  But look at our own Fed Funds rate.

Jon C. Ogg
July 15, 2009