Kuroda surprises markets with negative interest rates

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  • The Bank of Japan has joined to ECB in moving interest rates below zero - the BoJ set the rate for some deposits being held by the central bank at -0.1% following a monetary policy meeting that concluded on Friday. +

  • The unexpected decision passed by 5 votes to 4 and means that commercial banks will effectively be charged to hold money at the central bank in an effort to encourage them to lend more money.

  • The Bank of Japan, which has been engaging in a huge monetary easing programme under Governor Haruhiko Kuroda as part of Prime Minister Shinzo Abe's 'Abenomics' programme, did not rule out lowering rates further.  

  • The central bank said it was yet again delaying the forecast for when inflation might reach its target of 2%, to the first half of the 2017 fiscal year, because of declining oil prices. 

  • Data released on Friday showed consumer prices, excluding fresh food, were close to zero (0.1%) in December. *