The Bank of Japan drove a short-term interest rate below zero, a dramatic step in its already unprecedented effort to stoke inflation and a likely sign it will continue its aggressive asset purchases.
The BOJ bought three-month bills for more than their redemption value on Tuesday, traders said, essentially paying to lend money to the market. The central bank’s first purchase at a yield less than zero underscores its determination to pay literally any price to help reflate the long-moribund economy.
BOJ officials wouldn’t confirm the negative-yield purchases, which were part of a market operation that bought 500 billion yen (2.90 billion pounds) of short-term bills, on the grounds they cannot disclose individual transactions. But the bank was clearly untroubled by the idea of crossing this line.
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