Less than Zero in Japan
On February 16, the Bank of Japan joined the ECB, the Swiss National Bank, and others in adopting negative interest rates on deposits. Though the move immediately pushed the interest-rate structure lower, as expected, its effects on the yen and stock market have been an unpleasant surprise.
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TOKYO – In a bold attempt to reflate the Japanese economy, the Bank of Japan has now pushed interest rates on deposits into negative territory. Though this policy is not new – it is already being pursued by the European Central Bank, the Bank of Sweden, the Swiss National Bank, and others – it is uncharted ground for the BOJ. And, unfortunately, markets have not responded as expected.