Need more time to assess impact of negative rate policy on markets – BOJ’s Ishida

Discussion in 'Fundamental Analysis' started by FXStreet_Team, Feb 18, 2016.

  1. FXStreet_Team

    FXStreet_Team Well-Known Member Trader

    Oct 7, 2015
    Likes Received:
    Bank of Japan (BOJ) board member Koji Ishida was once again on the wires over the last hour, noting the effects of negative interest rates on the Japanese financial system.

    Key Quotes:

    Dissented to adoption of negative rates because doing so now won't have much positive effect
    Effect of negative rates on stimulating portfolio rebalancing, pushing down yield curve limited

    Private borrowing costs are already very low so adopting negative rates likely won't help boost capex much

    Even if negative rates prompts Japan investors to shift assets overseas, that won't stimulate Japan's economic activity

    Japan's financial system is resilient, so don't think declines in bank stocks reflect jitters over financial system instability

    Need more time to assess impact of negative rate policy on markets

    Had some doubts of easing policy when markets were so unstable, though that wasn't key reason for dissenting last month

    Maintaining current ultra-loose policy for too long could affect Japan's now resilient banking system

    Given impact on banks, it's important to end deflation as soon as possible and normalise interest rates
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