TOKYO (Reuters) - Negative rate policy - once considered only for economies with chronically low inflation such as Europe and Japan - is becoming a more attractive option for some other central banks to counter unwelcome rises in their currencies.
But a closer look at Europe and Japan – where negative rates are in place – shows the performance has been mixed at best.
Below is a timeline of key European Central Bank (ECB) and Bank of Japan (BOJ) decisions in the development of unconventional rates policy:
* The BOJ introduces quantitative and qualitative easing (QQE) under Governor Haruhiko Kuroda, a massive asset-buying program dubbed as “bazooka” stimulus.
* The ECB adopts negative rate policy, cutting the deposit rate to -0.1% to stave off the threat of deflation, and also lowers its two other interest rates.
* The ECB cuts all three of its interest rates, including its deposit rate which was cut to -0.2% from -0.1%.
* The BOJ expands QQE as slumping oil prices and weak consumption threatened achievement of its price goal.
* The ECB cuts its deposit rate to -0.3% from -0.2%.
* The BOJ adopts negative rate policy, setting its short-term rate target at -0.1%.
* The ECB cuts all three of its interest rates, including its deposit rate which was cut to -0.4% from -0.3%, and expands its asset-buying program.
* The BOJ eases monetary policy by ramping up buying of exchange-traded funds (ETF).
* The BOJ revamps its policy framework, adding a 0% target for 10-year government bond yields to its -0.1% short-term rate target. The policy, dubbed yield curve control (YCC), was partly aimed at preventing long-term yields from falling too much.
* The BOJ takes steps to make YCC more flexible, allowing yields to move in a wider band.
* The ECB pushes out the timing of its first post-crisis rate hike to 2020 at the earliest, pledging to keep rates at record lows at least through the end of 2019.
* The ECB pushes back timing of projected rate hike, pledging to keep rates steady at least through the first half of 2020.
* The ECB signals readiness to keep monetary policy ultra-loose for a prolonged period, citing persistently low inflation.
* The BOJ strengthens pledge to ease policy, saying it will do so “without hesitation” if a global slowdown jeopardizes Japan’s economic recovery.
Reporting by Daniel Leussink; Editing by Alex Richardson
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