BOJ is expected to diminish key rate

On Thursday, the BOJ’s ex-governor stressed that the country’s number one financial institution should decrease its -0.1% interest rate to approximately -1% for the sake of fighting deflation in Japan.

From his point of view, the BOJ should take this measure as it’s getting harder and harder to keep expanding government debt purchases because of losses on these investments faced by the BOJ.    

Household as well as commercial banks have already criticized the BOJ’s negative rate policy for putting an excessive burden on Japanese savers as well as the country’s financial system, thus underscoring the great challenge faced by the major bank in its ongoing battle to cope with deflation.

For Japan in order to meet this crucial goal for the national economy, the BOJ requires considering further expansionary policy. For instance, it could be carried out via decreasing the interest rate.       

We should remind readers that in January, the BOJ made up its mind to start charging 0.1% interest on certain bank reserves parked with the BOJ to stimulate the national economy. 

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