BOJ stuns markets with negative interest rate surprise

The Bank of Japan unexpectedly cut a benchmark interest rate below zero today, stunning investors with another bold move to revive the economy as volatile markets and slowing global growth threaten its efforts to beat deflation. Asian shares jumped, the yen tumbled and sovereign bonds rallied after the BOJ said it would charge for a portion of bank reserves parked with the institution, an aggressive policy pioneered by the European Central Bank (ECB). "What's important is to show people that the BOJ is strongly committed to achieving 2 percent inflation and that it will do whatever it takes to achieve it," BOJ Governor Haruhiko Kuroda told a news conference after the decision. In adopting negative interest rates Japan is reaching for a new weapon in its long battle against deflation, which since the 1990s have discouraged consumers from buying big because they expect prices to fall further. Deflation is seen as the root of two decades of economic malaise. Kuroda said the world's third-biggest economy was recovering moderately and the underlying price trend was rising steadily. "But there's a risk recent further falls in oil prices, uncertainty over emerging economies, including...

from timesofmalta.com http://ift.tt/1PXxJkC
via IFTTT