Japan is Willing to Cut Interest Rates Even Further Into Negative Territory

In a recent interview with Japanese newspaper Sankei, Bank of Japan Governor Haruhiko Kuroda indicated he wasn’t opposed to lowering already-negative interest rates even further if it helps spur economic growth.

“The degree of negative rates introduced by European central banks is bigger than Japan. Technically there definitely is room for a further cut,” said Kuroda.

The Bank of Japan’s current rate sits at -0.1%, while Switzerland and Sweden’s central banking rates are -0.75% and -0.5%, respectively.

Debate rages on about whether negative rates actually do anything to help the economy, and some people think they actually do more harm than good.

Japan is in the midst of a multi-decade economic slowdown, plagued by slow growth and shifting demographics. Regulators have responded with ultra low interest rates and huge amounts of stimulus, but GDP is still barely moving.

For now, the rate policy and stimulus remain, but regulators will present their research findings next month and consider any changes then.

EWJ-2016-08-22

The iShares MSCI Japan ETF (NYSE:EWJ) rose $0.02 (+0.20%) to $12.32 in Monday afternoon trading. The largest U.S.-listed ETF targeting Japanese equities has risen about 1.7% year-to-date.

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