While the ECB cut its deposit rates by 10 basis points to -0.30% on Thursday, Bank of Japan Governor Haruhiko Kuroda said Monday that the Central Bank does not need to adopt negative deposit rates after keeping the country’s monetary policy steady for more than a year. Japan’s borrowing costs are already quite low because of their substantial quantitative easing. The BOJ 0.10% deposit rate cannot mirror the ECB’s move as this will lead to an insufficient pool of bonds it buys to expand the monetary base. Japan’s economic fundamentals have become more resilient to external shocks and the economy is becoming more stable as evidenced by the data. In his comments, Kuroda underscored that the Central Bank has “the capability as well as the strong will” to achieve its inflation target of 2.00% at the earliest possible time.
Japan Avoids Recession
Daily Analysis - 08/12/2015