User Login

img
29 Jan

Bank of Japan to curtail Interest rate below zero:

admin Comments (6)
Economic slowdown in China,plunging oil prices is a concern around the world makes the Japan's central bank to introduce negative benchmark interest rate.
 
Despite nearly a quarter-century of slow growth, the Bank of Japan had resisted reducing rates below zero to stimulate the economy. The 5-4 vote on the bank’s policy committee showed how reluctant it was to embrace a change in that thinking.
 
But the board of governors took great pains to say the move was based on global conditions, not the Japanese economy itself, which has seen mixed results from Prime Minister Shinzo Abe’s program of reforms.
 
“Japan’s economy has continued to recover moderately,” the bank said in a news release. “Recently, however, global financial markets have been volatile against the backdrop of the further decline in crude oil prices.”
 
Those changes might hurt the business confidence of Japanese companies and encourage deflation, the bank added, and the measures announced on Friday would “pre-empt the manifestation of this risk.”
 
Its decision to charge commercial banks for holding their money instead of paying them interest signaled a new willingness to pull out all the stops in a bid to bolster economic growth.
 
In a statement explaining the move, the Bank of Japan even said that it might “cut the interest rate further into negative territory if judged as necessary.” Penalizing commercial banks for keeping money on deposit at the central bank puts pressure on them to lend instead. That makes it easier for companies to invest in new projects and easier for consumers to borrow and spend.
 
The Japanese central bank was also uncommonly blunt in mentioning the economy of another country, China, as one of the risks that could damage Japan’s economy.
 
The new negative interest rate, minus 0.1 percent, will take effect on Feb. 16. It will only be assessed on balances that commercial banks deposit at the central bank that exceed regulatory minimums.
 
The Japanese central bank will continue paying its existing rate of 0.1 percent on some reserves that banks have already placed. And it will pay no interest on certain reserves that are held to meet regulatory requirements.
 
Three other countries already have negative interest rates. Denmark has an interest rate of minus 0.65 percent, Switzerland’s is minus 0.75 percent and Sweden’s is minus 1.1 percent. Deposits held by the European Central Bank also have a negative rate: minus 0.3 percent.
 
Although negative interest rates send a dramatic signal about a willingness to ease monetary policy, the practical effects of the Bank of Japan’s action are actually limited.
 
The central bank could have opted instead to expand its already considerable purchases of bonds, in a bid to drive near-zero interest rates in debt markets even lower. But it chose not to do so, a decision that may indicate a hope on the part of some Japanese central bankers that Mr. Abe’s government will also adopt fiscal measures to help the economy.
 
0 0 0
 

Comments

 

Leave a Comment

 

Categories

Popular

OPEC-Geocivics strain boosts Oil post
Nov 26 , 2015

Focus on global adversity is back as crude drops,Yen rises:
Feb 03 , 2016

Gold dips 2 percent as dollar strengthens:
Feb 23 , 2016

Recent

The Euro Features
Aug 02 , 2018

Impact of US Market Shutdown
Feb 09 , 2018

Aussie, Kiwi Hover at 1-Month Lows, RBNZ Holds
Feb 08 , 2018

Tags

opec oil prices wti brent oil forex signal trading signals currency pair manual automated trading monetary policy committee pound dropped sterling tumbles mark garney new member interest rates central banks monetary policy bond market borrowing costs credit cycle recession unemployment rate economy job market slow gdp interest rate central bank u.s economy treasuries fed rate hike green back traders federal reserve reverse repurchase programme repo programme stimulus debt purchase dovish statement quantitative easing us dollar warrants oil price economic slowdown global benchmark overproduction china yen economic data hedge funds speculators gold imf upgraded price forecast yuan economic growth global growth euro area slowdown lending rate financial events bank of japan benchmark commercial banks renminbi currencies boj pboc government bond dollar employment trade spdr cftc gdp financial markets banks oil stockpiles risky assets money markets abe jpy us bankers canada oecd investment liberal government analysts al naimi barrel crude bank governor euro ecb euro zone inventory brent wall street financial proposal australian aussie draghi monetary stimulus eu fed fomc negative rates reserve funds u.s policymakers brexit sterling pound smith futures inventories evans policy makers data yellen europe negative bank bankruptcies crude futures asia rate japanese policy meeting european union deficit greece merkel germany g-20 downgrade saudi iran qatar japan economic ounce fx currency nikkei dudley securities libya etf payrolls policy greenback tokyo uk strategists federal g7 britain market survey economists middle east bullion kiwi new zealand rbnz rates $ job voting snb swiss franc u.k matsui goldman term nigeria bpd australia reserve bank election vote decisions boe asian shares week ship cents qe money monetary rba monetary policies production investors bailout fx news resources taper chinese government asset theresa may may president price bonds report cpi clinton trump december hike england political presidential fbi pounds asian stock market stock market news forex market dollar index us currency bond yields energy minister yield reserve month forex news uk economy euro economy eurvscad forex daily news audcad calender news italy european percent eur usd news forex daily news updates usdjpy trade forex learn forex world economy global economy stock news uk forex news us forex news uk news us news cpi news federal reserve rate us economy ecb bank forexmarket australian myefo report majorforexnews forexnews dailyforexnews tradefxp news tradefxp news hour forexholiday forex christmas boxingday forex boxing day us oil crude oil wti oil bitcoin crash european stock market stock market trading trading session forex market news daily fx news forex news daily daily news iran unrest oil price high euro market eurusd stock opening bell stock maket news euro president china president bitcoin cryptocurrency kodakcoin ripple yen usdjpy euro-high world finance news finance news today finance news economic news us shutdown us govt shut down brexit euro britain usd news daily forex news forex market hours crypto currency bitcoin wanllet market news us market audusd nzdusd audnzd us market shutdown how it will affect market blockchain crypto wtiusd european economy european stocks jpy yen japanese news japan economy finance holder share invest market trading the euro currency features the euro currency market outlook

Archives

Contact Us

Newsletter

Connect With Us

Copyright © 2014 TradeFxP Ltd. All Rights Reserved.