Arab Today, arab today boj to introduce negative interest rates delays inflation target amid oil price slump
Last Updated : GMT 15:54:09
Arab Today, arab today
Arab Today, arab today

BOJ to introduce negative interest rates, delays inflation target amid oil price slump

Arab Today, arab today

Arab Today, arab today BOJ to introduce negative interest rates, delays inflation target amid oil price slump

BOJ to introduce negative interest rates
Tokyo - XINHUA

The Bank of Japan (BOJ) on Friday following the conclusion of a two-day policy board meeting said it would introduce negative interest rates from next month to encourage more lending and business spending amid projections the central bank will not clear its 2 percent inflation goal, as oil prices' slide and a global economic downturn threatens to further impact spending.

The BOJ surprised markets here, with economists widely believing further easing measures announced Friday would be negligible if at all, by saying it plans to introduce a negative interest rate from Feb. 16, as falling oil prices have hampered the bank's reflationary efforts, with the shock move aimed at proactively defending against global economic malaise denting business sentiment here.

Bank of Japan Governor Haruhiko Kuroda, often lambasted for staying pat on policy for too long while maintaining unrealistic reflationary targets, yet conversely no stranger to shocking markets when needs must, has consistently maintained he plans to eliminate what he has described as a "deflationary mindset" in Japan, particular regarding business spending, but also private consumption, which account for around 60 percent of Japan's gross domestic product.

The bank said Friday it plans to achieve its inflation target "at the earliest possible time," amid turbulent oil prices, the protected slump of which has impacted prices here, and voted to apply a negative interest rate of minus 0.1 percent to current accounts held by financial institutions, in a narrow 5-4 vote by its policy board members.

The central bank's policy board also decided the bank will further cut the interest rate below minus "as deemed necessary."

"The BOJ will cut the interest rate further into negative territory if judged as necessary," the bank said in a statement following its unexpected decision Friday.

While the European Central Bank (ECB) has already plunged into negative interest rates, with President Mario Draghi last week intimating that more stimulus will follow in March from the bank to hit its inflation target, the BOJ initially maintained it was reluctant to follow suit.

"This is a scary, dramatic move, and we may see the more negative yields will be, the better the economy gets. I thought they had ruled them out due to the risk of side effects," Hideo Kumano, chief economist at Dai-ichi Life Research Institute, was quoted as saying.

But by introducing the negative interest rates the bank is hedging that commercial banks will be further incentivized to lend to businesses to promote widespread investment and growth.

The bank did, however, once again, announce a delay in the timing of its 2 percent inflation goal to the first half of fiscal year 2017, with the BOJ also cutting its inflation target for fiscal year 2016, stating it now expects CPI to increase 0.8 percent from 1.4 percent projected three months ago.

The bank said it still ultimately has an optimistic view of the pace of inflation looking ahead, stating that it expects consumer inflation to accelerate to 1.8 percent in the fiscal year ending in March 2018, following the new measures implemented Friday taking effect.

In terms of the bank's monetary base, the policy board decided on Friday to continue to increase the base at an annual pace of around 80 trillion yen (674.48 billion U.S. dollars), through aggressive purchases of government bonds and risky assets conducted under its quantitative and qualitative easing (QQE) program.

The bank's decision follows a raft of economic data released by the government on Friday morning that missed market expectations, sparking concerns for the outlook of the world's third-largest economy.

A slump in factory output and a decline in household spending, as well as consumer prices in Dec. edging up only 0.1 percent, while CPI for 2015 remaining largely flat, painted a glum outlook for the domestic economy.

The rate cut, however, immediately sent the benchmark Nikkei stock index shooting up 3 percent, and saw the yen retreat around 2 percent versus its U.S. counterpart. But the market's gains here were soon erased as investors became concerned the bank's move could trigger a currency war.

Despite the bank's intentions behind pumping new money into markets, some analysts voiced concern Friday that an ongoing stock market rout in Tokyo caused by investors switching out of riskier assets like stocks and into safe havens like the yen, should a currency war occur, would push its price back up and, in fact, discourage firms from increasing capital expenditure despite the banks ultra-accommodative policy.

Name *

E-mail *

Comment Title*

Comment *

: Characters Left

Mandatory *

Terms of use

Publishing Terms: Not to offend the author, or to persons or sanctities or attacking religions or divine self. And stay away from sectarian and racial incitement and insults.

I agree with the Terms of Use

Security Code*

Arab Today, arab today boj to introduce negative interest rates delays inflation target amid oil price slump Arab Today, arab today boj to introduce negative interest rates delays inflation target amid oil price slump

 



Arab Today, arab today
Arab Today, arab today Prepares to present her new collection

GMT 14:29 2017 Monday ,20 February

Prepares to present her new collection
Arab Today, arab today Tourism shows signs of recovery

GMT 09:59 2017 Monday ,20 February

Tourism shows signs of recovery
Arab Today, arab today To release new antiques collection

GMT 20:33 2017 Friday ,17 February

To release new antiques collection
Arab Today, arab today Optimism on the front line

GMT 07:24 2017 Monday ,20 February

Optimism on the front line
Arab Today, arab today Murder of 2 reporters in Dominican Republic

GMT 22:45 2017 Thursday ,16 February

Murder of 2 reporters in Dominican Republic

GMT 09:49 2017 Saturday ,18 February

Qatar Stock Exchange Index Gains 190.17 Points This Week

GMT 09:15 2017 Friday ,17 February

Asia stocks retreat after week-long Trump rally

GMT 08:14 2017 Friday ,17 February

Bahrain Bourse daily trading report

GMT 21:28 2017 Thursday ,16 February

US Stocks End High on Tuesday

GMT 21:18 2017 Thursday ,16 February

Chinese Yuan Strengthens to 6.8632 Against USD Wednesday

GMT 09:55 2017 Thursday ,16 February

Robust Omani Riyal exchange rate affirmed
View News in Arabic - Business: أسواق مالية
Arab Today, arab today
Arab Today, arab today
Arab Today, arab today Kidogo provides childcare for underserved

GMT 20:24 2017 Wednesday ,15 February

Kidogo provides childcare for underserved
Arab Today, arab today Tragic fluctuations of Bakhtiari's life revealed

GMT 06:50 2017 Wednesday ,15 February

Tragic fluctuations of Bakhtiari's life revealed
Arab Today, arab today London to tax old cars

GMT 14:06 2017 Friday ,17 February

London to tax old cars
Arab Today, arab today Pluto's unruly moons

GMT 06:31 2015 Thursday ,04 June

Pluto's unruly moons
Arab Today, arab today Nissan enhances sales in most markets

GMT 14:08 2017 Monday ,20 February

Nissan enhances sales in most markets
Arab Today, arab today Competes Sweden and Germans by S90

GMT 22:36 2017 Thursday ,16 February

Competes Sweden and Germans by S90
Arab Today, arab today Egypt to hold first session of Arab film festival

GMT 21:11 2017 Saturday ,18 February

Egypt to hold first session of Arab film festival
Arab Today, arab today Teach monkeys to recognize themselves in mirror

GMT 20:41 2017 Wednesday ,15 February

Teach monkeys to recognize themselves in mirror

GMT 07:30 2017 Saturday ,18 February

Actress Nadeen Al Rassi views art as her entity

GMT 06:40 2017 Friday ,10 February

MP calls for removing text from Islamic story

GMT 19:10 2017 Friday ,17 February

Hats, scarves add beauty to women

GMT 10:26 2017 Tuesday ,14 February

Emergency UN meeting in Harare

GMT 14:04 2017 Tuesday ,14 February

"Lagom" new Swedish concept in interior design

GMT 21:49 2017 Thursday ,16 February

Scientists develop new therapy

GMT 19:16 2017 Friday ,17 February

Aziz House ready to host the tourists

GMT 13:12 2015 Saturday ,09 May

Sheikh Sultan opens Sharjah Centre

GMT 12:39 2017 Monday ,20 February

newest smartphone another winner for Huawei

GMT 13:16 2017 Tuesday ,14 February

First fashion model with Down syndrome
Arab Today, arab today
Arab Today, arab today
 
 Arab Today Facebook,arab today facebook  Arab Today Twitter,arab today twitter Arab Today Rss,arab today rss  Arab Today Youtube,arab today youtube  Arab Today Youtube,arab today youtube
arabstoday arabstoday arabstoday arabstoday
arabstoday arabstoday arabstoday
arabstoday
بناية النخيل - رأس النبع _ خلف السفارة الفرنسية _بيروت - لبنان
arabstoday, Arabstoday, Arabstoday