Report

BOJ Tried a Bazooka with Negative Rates, but It's Just a Pop Gun

posted by Richard Katz on January 29, 2016

Found in Japan, categorized in Macro

Tags: Richard Katz TOE BOJ

Report Cover

Headline

These corporations have so much cash on hand (or in the bank or other financial assets) that, even when the do increase investment somewhat, they have no need to borrow more from the banks.

Abstract

Followings are the key points fro this report,

- BOJ tried another surprise “bazooka” but only managed a pop gun
Will apply a “negative interest rate” of 0.1% on new deposits of “excess reserves” held by banks at the BOJ
Hope is that it will get banks to lend more and thereby boost company investment and consumer spending
It won’t work: problem is not banks unwillingness to lend, but business/firm unwillingness to borrow 

About Richard Katz

Richard Katz

Richard Katz is Editor of The Oriental Economist Report, a monthly newsletter on Japan, as well as the semi-weekly TOE Alert e-mail service on Japan, and is also a special correspondent at Weekly Toyo Keizai, a leading Japanese business weekly.

Request a speaking engagement