Japan's central bank adopts negative interest rate policy

TOKYO, Jan 29 (KUNA) — Japan’s central bank made a surprise decision on Friday to introduce a negative interest rate for the first time ever to achieve its inflation target.
At a two-day policy meeting, Bank of Japan’s (BOJ) Governor Haruhiko Kuroda and his board colleagues voted to apply an interest rate of minus 0.1 percent to part of accounts held by financial institutions at the central bank, effective February 16th.
The policy makers decided to introduce “quantitative and qualitative monetary easing with a negative interest rate in order to achieve the price stability target of two percent at the earliest possible time,” the central bank said in a statement, adding that it will cut the interest rate further into negative territory if judged as necessary.
In response to the BOJ’s shock move, Tokyo stocks briefly jumped more than three percent and the US dollar rose sharply to a one-month high above the JPY 121 level in the afternoon.
Meanwhile, the BOJ pushed back its timeframe for achieving its two percent inflation goal from late 2016 to mid-2017.
“In the case where the effects of the decline in energy prices will persist and the year-on-year rate of change in the consumer price index will not easily increase for a long period, there is a risk that the pace of increase in inflation expectations might be different from what is envisaged,” the central bank noted. Earlier in the day, government data showed Japan’s core inflation rate for 2015, excluding volatile food prices, at 0.5 percent. (end) mk.gta