Article by ForexTime
The Bank of Japan decided to adopt negative interest rates at its policy meeting on Friday, triggering a rally on the Tokyo Stock Exchange, with the Nikkei 225 rising almost 600 points at one stage, but then falling back sharply as investors contemplated the effects of the new measure. The yen weakened by as much as 2.2% against the dollar.
In a statement, the BOJ said it adopted the negative interest rate policy in order to achieve its price stability target of 2% at the earliest possible time.
The BOJ has adopted a benchmark rate of -0.1 per cent, from a previous level of 0.1 per cent. It is the first time they have moved interest rates since October 2010.
The vote was a close one: the decision to introduce a negative rate was the result of a 5-4 majority vote.
However the Bank’s quantitative and qualitative easing program was maintained at its current level, buying assets at a rate of 80 trillion yen a year.
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USD/JPY spiked to 121.40 on the BOJ announcement from 118.47 before steadying at 120.75 yen. EUR/JPY jumped to 132.29 from 121.59.
Article by ForexTime
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