Monetary policy reached its limits of influence in Japan in the late 1990s due to the fact that:

Question

Quizplus · Accepted Answer

When the overnight interest rate had been reduced to a nominal rate of zero, it meant that the central bank was unable to further lower interest rates to stimulate the economy. This is known as the zero lower bound, where nominal interest rates cannot be reduced any further. Therefore, monetary policy reached its limits of influence in Japan during the late 1990s.

Monetary Policy Reached Its Limits of Influence in Japan in the Late