Drinks Are Free as Bartenders Refill Punchbowl (William Pesek)

Oct. 6, 2010 (Bloomberg) -- It has been 13 years since the Bank of Japan was freed from the clutches of politicians. What has it done since? Cut interest rates to zero and left them there.

If that’s your definition of “independence” then it’s different from mine. Sure, the BOJ managed to boost rates here and there -- even getting them as high as 0.5 percent. It has since relented. This week, it bowed anew to politicians’ demands to lower its 0.1 percent benchmark toward zero.

Japan doesn’t cut rates. It shaves them. This predicament puts Japan at the center of a dangerous trend: the death of central-bank independence. The ramifications for credit markets will be huge.

Six months ago, it was possible to say we’re in crisis, extreme measures are needed and central banks are doing their part. Now, we must accept that ultra-low borrowing costs will be with us for a while because governments will make sure of it.

READ MORE: Bloomberg