Bank of Japan introduces negative interest rate

The bank will apply a negative interest rate of -0.1 percent to current accounts of financial institutions.

At the Monetary Policy Meeting held today, the Policy Board of the Bank of Japan decided to introduce "Quantitative and Qualitative Monetary Easing (QQE) with a Negative InterestRate" in order to achieve the price stability target of 2 percent at the earliest . The bank will likely pursue monetary easing by making full use of possible measures in terms of three dimensions: quantity, quality, and interest rate.

The bank will apply a negative interest rate of -0.1 percent to current accounts of financial institutions. It will cut interest rates further if necessary.

Specifically, the bank will adopt a three-tier system in which the outstanding balance of each financial institution's current account at the bank will be divided into three tiers, of which, a positive interest rate, a zero interest rate, or a negative interest rate will be applied to each of the accounts.

The bank will carry out a loan support program, the funds-supplying pperation to support financial institutions in disaster areas affected by the Great East Japan Earthquake, and the funds-supplying operations against pooled collateral at zero interest rates.