Technoglitch
Core Member
TOKYO—Japan’s central bank stunned the markets Friday by setting the country’s firstnegative interest rates, in a desperate attempt to keep the economy from sliding back into the stagnation that has dogged it for much of the last two decades.
The unexpected move shows the Bank of Japan’s determination to fight global headwindsthat threaten to tip the country back into deflation, a damaging cycle of price falls and weakening economy.
Yet it also shows how few policy options the BOJ has left. The central bank is already buying ¥80 trillion ($674 billion) in assets a year, putting nearly a third of Japan’s massive bond market in its hands. It left the size of that asset-buying program unchanged.
After three years of BOJ asset purchases,inflation expectations in Japan are sagging, and recent volatility in global markets has threatened to undo some of what the BOJ had achieved with its extraordinary easing: a weaker yen and higher stock prices.
Bank of Japan Introduces Negative Interest Rates - WSJ
The unexpected move shows the Bank of Japan’s determination to fight global headwindsthat threaten to tip the country back into deflation, a damaging cycle of price falls and weakening economy.
Yet it also shows how few policy options the BOJ has left. The central bank is already buying ¥80 trillion ($674 billion) in assets a year, putting nearly a third of Japan’s massive bond market in its hands. It left the size of that asset-buying program unchanged.
After three years of BOJ asset purchases,inflation expectations in Japan are sagging, and recent volatility in global markets has threatened to undo some of what the BOJ had achieved with its extraordinary easing: a weaker yen and higher stock prices.
Bank of Japan Introduces Negative Interest Rates - WSJ
