BOJ May Be Clutching at Straws

The Bank of Japan has begun paying banks for the privilege of lending them cash in a sign the central bank is reaching the limits of its power to reflate the economy, although it may soon be forced to pump yet more money into the financial system.

Negative yields are more than a footnote in the BOJ’s unprecedented “quantitative and qualitative easing” (QQE) policy. They show that Governor Haruhiko Kuroda’s 18-month-old monetary experiment is struggling barely halfway to its 2 percent inflation goal.

“Practically, this is not a policy that you can maintain for a long time,” said Tomohiro Miyasaka, fixed-income strategist at Credit Suisse. “The BOJ is absorbing bills and bonds from markets so much that one day there could be no bills and bonds left to buy.”

CNBC

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.