The Bank of Japan implements negative interest rates on Tuesday in a radical plan already deemed a failure by financial markets, highlighting Tokyo's lack of options to spur growth as global markets sputter.
The central bank, putting into effect a Jan 29 decision that stunned investors, will charge banks 0.1% for parking additional reserves with the BOJ - in a bid to push down interest rates and encourage banks, businesses and savers to spend and invest.
While the negative-rate announcement briefly drove down the yen and buoyed Japanese share prices, markets quickly reversed as the policy backfired with investors.
"It's getting clearer that Abenomics is a paper tiger," said Seiya Nakajima, chief economist at Office Niwa, a consultancy, referring to Prime Minister Shinzo Abe's policy mix of monetary easing, spending and reform. "The impact of monetary easing is similar to currency intervention. The first time they do it, there's a huge impact. But as they repeat it, the impact will wane," said Mr Nakajima.
Though senior BOJ officials were at pains to say they had calibrated only a minor impact on Japanese banks, their stock prices plunged, contributing to a global meltdown in financial shares that drove the latest leg down in the global market rout.
Click Here To Register For Free Trial Services OR Give A Missed Call : +6531581402 Follow Us On Twitter : www.twitter.com/epicresearchsg Like Us On Facebook : www.facebook.com/EpicResearchSingapore Need Any Assistance Feel Free To Mail Us at : info@epicresearch.sg
The central bank, putting into effect a Jan 29 decision that stunned investors, will charge banks 0.1% for parking additional reserves with the BOJ - in a bid to push down interest rates and encourage banks, businesses and savers to spend and invest.
While the negative-rate announcement briefly drove down the yen and buoyed Japanese share prices, markets quickly reversed as the policy backfired with investors.
"It's getting clearer that Abenomics is a paper tiger," said Seiya Nakajima, chief economist at Office Niwa, a consultancy, referring to Prime Minister Shinzo Abe's policy mix of monetary easing, spending and reform. "The impact of monetary easing is similar to currency intervention. The first time they do it, there's a huge impact. But as they repeat it, the impact will wane," said Mr Nakajima.
Though senior BOJ officials were at pains to say they had calibrated only a minor impact on Japanese banks, their stock prices plunged, contributing to a global meltdown in financial shares that drove the latest leg down in the global market rout.
Click Here To Register For Free Trial Services OR Give A Missed Call : +6531581402 Follow Us On Twitter : www.twitter.com/epicresearchsg Like Us On Facebook : www.facebook.com/EpicResearchSingapore Need Any Assistance Feel Free To Mail Us at : info@epicresearch.sg
0 comments:
Post a Comment