Japan Introduces Negative Interest Rate

In a surprise move, the Bank of Japan on Friday introduced a negative interest rate, in an effort to boost the world’s third-largest economy. The central bank will impose a 0.1 percent fee on some deposits, in hopes that it will encourage commercial banks to lend more and stimulate growth as the country grapples with a continuing economic slump. Following the announcement, Japan’s benchmark Nikkei 225 stock index rose while the Japanese yen slid and the U.S. dollar jumped to 120.40 yen from about 118.50 earlier in the day. The BOJ said that it would divide banks’ deposits into three tiers, with categories earning positive, zero, and negative interest rates. The BOJ said it would continue the policy in order to achieve an inflation target of 2 percent.