The last hike was in 2007.
Because this means banks lose by parking capital with the BoJ, they are encouraged to lend to businesses and thereby jump-start the economy and inflation.
The BoJ has also spent vast amounts buying up bonds and other assets to pump liquidity into the financial system.
The negative interest rate policy has helped keep a lid on the cost of servicing Japan’s debt, which at around 260 per cent of national output is one of the world’s highest.
But it has sharply weakened the yen against the dollar, which is good news for exporters but unwelcome for consumers as it has made imports more expensive.
Inflation has, in fact, been at or over the BoJ’s target of two per cent for almost two years.
Some 67 per cent of surveyed economists predict that the policy rate setting will be hiked to between zero and 0.1 per cent.
BOJ officials are also considering ending their purchasing of exchange-traded funds and real estate investment funds, though they will continue to buy government debt.
Source: AFP
https://www.businesstimes.com.sg/compan ... tive-rates
