09-02-2016, 12:03 AM
Japan's core consumer prices fell for a fifth straight month and marked the biggest annual drop in more than three years in July, government data showed on Friday, keeping the central bank under pressure to expand an already massive stimulus program. The gloomy data reinforces a dominant market view that premier Shinzo Abe's stimulus programs have failed to dislodge the deflationary mindset prevailing among businesses and consumers.
Japan July core CPI falls more than expected on-year
The adoption of negative interest rates — initially launched in Europe in 2014 and now embraced in Japan — represents a major turning point for central banking. Previously, emphasis had been placed on boosting aggregate demand — primarily by lowering the cost of borrowing, but also by spurring wealth effects from appreciating financial assets.
Negative interest rates set stage for next crisis, Stephen Roach says - MarketWatch
Negative interest rates have helped boost demand and supported stable prices by supplementing conventional monetary stimulus, senior experts at the International Monetary Fund said in a paper. The Bank of Japan became the latest central bank to start charging commercial banks for the privilege of parking their excess funds earlier this year. The bank joined counterparts in the euro zone and Switzerland in slashing interest rates below zero in an effort to shake up its sclerotic economy and push up feeble inflation.