The Bank of Japan shocked markets on Friday by lowering the benchmark interest rate into negative territory, as part of their effort to stimulate their faltering economy.
Governor of the Bank of japan Haruhiko Kuroda told a news conference: “What’s important is to show people that the BOJ is strongly committed to achieving 2 percent inflation and that it will do whatever it takes to achieve it.”
Japan has long been battling deflation and economic difficulties, which are likely to be worsened by China’s downhill slide. However, Kuroda confirmed that the country was well on its way to recovery, and that the sub-zero internet rate move was the next logical step.
Markets around the world jumped upon hearing the news, the first positive piece on information for a while. The FTSEurofirst 300 was up 1.2 percent, after a 1.7 percent fall yesterday, and the MSCI index rose 0.5 percent. However, the yen fell on the news, with the dollar up 0.4 percent.
