28 March 2016 12:00 am
The note, titled “read about negative rates in five minutes” and posted on its website, answers frequently asked questions such as whether banks can start charging households for holding deposits to pass on the cost they incur from negative rates. “Japan was in deflation for 15 years so everyone got used to it. To change this, we need to take bold steps,” the note said in replying to a question on whether the BOJ was going too extreme by adopting a negative rate policy.
It is rare for the BOJ to issue a note targeting the public on a specific policy step, underscoring its concern over the unpopularity of negative interest rates.
The BOJ unexpectedly cut a benchmark interest rate to minus 0.1 percent in January as it stepped up its faltering efforts to revive growth and pull Japan out of years of deflation.
But the historic shift to a radical policy prescription has failed to boost stock prices or arrest an unwelcome rise in the yen, drawing criticism from lawmakers for confusing, rather than calming, markets. Since then, the BOJ has been in damage control with senior officials scrambling to find positives in the policy which is proving unpopular with both the public and banks.