The Bank of Japan stunned markets worldwide with its surprise announcement of a negative
interest rate.
It is the first rate adjustment since October 2010... that puts that country's key benchmark
at minus point-one percent.
According to Kim Min-ji the rate can go even lower if necessary.
Japan's central bank has decided to adopt a negative interest rate policy.
In a tight 5 to 4 majority vote,... the Bank of Japan said it will introduce an interest
rate of minus zero-point-one percent...
starting February 16th... but will impose it only on current accounts that financial
institutions hold with it -- meaning lenders will be charged to keep money with the central
bank.
The move, which was pioneered by the European central bank, is seen as a means to push down
borrowing costs,... in hopes that people would spend more, save less and stimulate inflation.
"In terms of interest rates, the Bank of Japan has decided to implement a negative rate of
minus 0-point-1 percent.
Going forward, if it becomes necessary, we would look at making that even lower if necessary."
In addition, the BOJ will maintain its quantitative and qualitative easing program, expanding
its monetary base at the rate of 80 trillion yen,... or roughly 660 billion U.S. dollars,...
a year through buying up Japanese government bonds and other assets.
Japan has long suffered from deflationary pressures,... pushing the central bank to
take aggressive stimulus measures in recent years.
The central bank said while the Japanese economy was showing modest recovery,... there are
lingering concerns regarding plunging oil prices,... as well as uncertainties in emerging
markets, especially China.
However, some experts say the move will have limited impact.
"The decision was unexpected but it's not that aggressive.
Firstly, the minus interest rate does not apply to all assets and funds,... and despite
lowering their inflation forecast,... it's revised up its growth outlook -- so overall,
the move is expected to have limited impact on sentiment or the real economy."
Asian shares responded positively to the news,... with Japan's benchmark Nikkei shooting up
2-point-8 percent.
The Shanghai Composite rose 2-point-9 percent,... while Korea's benchmark KOSPI rose 0-point-3
percent.
Kim Min-ji, Arirang News.