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Bank of Japan introduces negative interest rate

Fri, Jan 29, 2016, 05:47 PM
In a surprise move, the Bank of Japan has introduced a negative interest rate in the third largest economy in the world, BBC reported.

The benchmark rate of -0.1% means that commercial banks will be charged by the Central Bank for some deposits.

It is designed to encourage the banks to use their reserves to lend to businesses in an attempt at countering Japan's economic stagnation.

The negative charge does not directly apply to ordinary customer accounts.

The country is desperate to increase spending and investment.

One of the side-effects of a moribund economy is falling prices , something that can send an economy into a downward spiral, as customers hold off spending in the hope prices will fall yet lower.

Japan has been desperate to boost consumer spending for years. At one point, it even issued shopping vouchers to stimulate demand.
Agency: Ap7am Desk
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