Bank of Japan introduces negative interest rate policy

Bank-of-Japan

Jan 29, 2016 (LBO) – The Bank of Japan has introduced a negative interest rate policy to achieve a price stability target of 2 percent at the earliest possible time.

At the Monetary Policy Meeting held today, the Policy Board of the Bank of Japan has decided to introduce Quantitative and Qualitative Monetary Easing with a Negative Interest Rate.

The Bank is to pursue monetary easing by making full use of possible measures in terms of three dimensions; quantity, quality, and interest rate, the Bank of Japan said in a statement.

The Bank is also to adopt a three-tier system in which the outstanding balance of each financial institution’s current account at the Bank will be divided into three tiers.

A positive interest rate, a zero interest rate, or a negative interest rate will be applied, respectively for them.

Accordingly, the Bank of Japan will apply a negative interest rate of minus 0.1 percent to current accounts that financial institutions hold at the Bank.