25 Mar 2016
BoJ to catch up on negative rates relative to Europe – Danske Bank
Research Team at Danske Bank, suggests that with the introduction of a negative interest rate policy the BoJ has added another dimension to its policy framework and can now pursue monetary easing by combining quantitative and qualitative easing (QQE) with negative interest rates.
Key Quotes
“On 16 March, Kuroda in a testimony to parliament explicitly said that it would be theoretically possible to lower the interest rate to - 0.5%.
We think that additional BoJ easing will primarily be focused on the interest rates and thereby catching up on negative policy rates relative to European central banks. Moreover, we think it is likely that the BoJ might focus on qualitative measures such as scaling up ETF and J-REIT from the current JPY3trn and JPY90bn, respectively) in order to optimise its asset purchases.”
Key Quotes
“On 16 March, Kuroda in a testimony to parliament explicitly said that it would be theoretically possible to lower the interest rate to - 0.5%.
We think that additional BoJ easing will primarily be focused on the interest rates and thereby catching up on negative policy rates relative to European central banks. Moreover, we think it is likely that the BoJ might focus on qualitative measures such as scaling up ETF and J-REIT from the current JPY3trn and JPY90bn, respectively) in order to optimise its asset purchases.”