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Bank Of Japan Unleashes 3-Tier Negative Interest Rate Policy
Friday, January 29, 2016 8:06
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The Bank of Japan has surprised the markets in its first meeting of 2016, with a decision to shift interest rates into negative territory.
The BOJ will pay an interest rate of -0.1% on current accounts held by financial institutions. Policy makers also signaled their willingness to do more, saying they would “cut interest rates further into negative territory if judged as necessary.”
The move should bolster inflation through the exchange-rate channel; the yen dropped immediately below 121 to the dollar after the announcement before regaining some lost ground. It should also kick start lending by punishing banks for keeping funds idle in BOJ deposits.
The danger is that negative rates put the sustainability of the BOJ’s policy framework at risk. Japan’s banks can hardly be expected to sell their Japanese government bonds to the BOJ if rates on the cash they receive in return will be negative …. http://www.zerohedge.com
Source: http://luismmx.blogspot.com/2016/01/bank-of-japan-unleashes-3-tier-negative.html
