In meeting of the Bank of Japan (BoJ), bank governor Haruhiko Kuroda and others on the nine-member board urged leaving all options on the table. Where further cuts to the country’s negative interest rate are concerned. The talk of further stimulus reflects an ever-growing trend in the world economy to slash rates and artificially pump new money into markets.
Following the September 19 BoJ meeting, Kuroda commented: “If it’s a question of whether I’m more inclined to go ahead with easing than at the last meeting, yes, that’s right,” confirming the fears of minority dissenters on the board who view the potential October 31 decision as a bad move.
The Bank will purchase Japanese government bonds (JGBs) so that 10-year JGB yields will remain at around zero percent.
The European Central Bank’s (ECB) refinancing operations rate currently sits at zero. The deposit rate was lowered 10 basis points to an unprecedented low of -0.5% in September. Banks across the Eurozone are struggling to just tread water. Employing unorthodox tactics to soften the blow. Such as encouraging customers to utilize fiduciary call deposits to avoid fees.
Across the Atlantic, things in the U.S. aren’t looking much more promising. After a July 31 cut from 2.50% to 2.25%, the Fed further chainsawed rates to 2%, with U.S.
The BoJ’s talk may sound positive, as political and pseudo-economic feel-good rhetoric always does. However, there are only so many ways to put lipstick on a pig. And sooner or later the aggregate of years of negative and low-rate policy worldwide could come home to roost. As they did back in 2008. Should that occur, having a reserve of decentralised. Permission digital currency will likely come in very handy.