The Bank of Japan's negative interest rates came into effect on February 15. This new policy has truly highlighted the Asian nation's lack of option when it comes to encouraging economic growth. Japan has been notorious for monetary easing since Shinzo Abe was voted into power in 2012. Critics of this new policy say that the monetary easing will not be as effective as desired. Japanese markets have become even more unstable as international markets have dipped this year. The 10-year Japanese government bond rose this week to 0.09% This shows how investors are unable to estimate the fair value of these bonds. In addition, many of the Japanese banking systems are unable to deal with negative interest rates.
http://www.theguardian.com/business/2016/feb/16/bank-of-japan-launches-negative-interest-rates-yen-markets
It is interesting to see how when Shinzo Abe was voted into power things including the Japanese markets, investing and monetary easing have all been either ineffective or becoming more unstable. Perhaps the Japanese government should consider a new leader in power to help restore stability in each of these areas that are suffering
ReplyDeleteIt is interesting to see how when Shinzo Abe was voted into power things including the Japanese markets, investing and monetary easing have all been either ineffective or becoming more unstable. Perhaps the Japanese government should consider a new leader in power to help restore stability in each of these areas that are suffering
ReplyDeleteIt is very interesting to see a country establish a negative interest rate as a desperation move in order to try and stimulate the economy. It will be interesting to track how this works for Japan as the countries who have tried this in the past have yielded inconclusive outcomes thus far. While the US is also beginning to talk of negative interest rates, the economy would have to sink much lower than it is currently. It will be interesting to see if saving continues in Japan as I'm sure by now the Japanese people have little faith in both their leaders and financial advisers to give them advice about what to do much less fix the current problem that is occurring.
ReplyDeleteI am very curious to see how these negative interest rates will play out. It does seem to be an extreme measure, and the question remains if it is entirely necessary to pull Japan out of its economic slump. Overall, there is not much consumer confidence in the economy in Japan which definitely hurts economic growth, and I'm personally unsure if negative interest rates will help solve that issue.
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