Negative Interest Rates in Japan

In the face of deteriorating global growth prospects the Bank of Japan in a controversial move at the end of last month decided to adopt negative interest rates. The benchmark rate will be lowered to -0.1% on February 16 in the hope that it will encourage the country’s banks to increase lending to businesses. Japan is facing economic stagnation and policymakers are keen to boost spending and investment. In a clear sign that the authorities are determined to achieve its inflation target of 2.0%, governor Haruhiko Kuroda has said that there is no limit as to how low rates could go. Japan’s economy is being hit by the downturn in China, which is also weighing on world growth and global oil prices.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s