TOKYO, Aug 14 (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 â€“ where negative rates are in place â€“ 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: April 2013 * The BOJ introduces quantitative and qualitative easing (QQE) under Governor Haruhiko Kuroda, a massive asset-buying programme dubbed as “bazooka” stimulus.
June 2014 * 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.
September 2014 * The ECB cuts all three of its interest rates, including its deposit rate which was cut to -0.2% from -0.1%.
October 2014 * The BOJ expands QQE as slumping oil prices and weak consumption threatened achievement of its price goal. December 2015 * The ECB cuts its deposit rate to -0.3% from -0.2%.
January 2016 * The BOJ adopts negative rate policy, setting its short-term rate target at -0.1%.
March 2016 * 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 programme. July 2016 * The BOJ eases monetary policy by ramping up buying of exchange-traded funds (ETF).
September 2016 * 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.
July 2018 * The BOJ takes steps to make YCC more flexible, allowing yields to move in a wider band.
March 2019 * 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. June 2019 * The ECB pushes back timing of projected rate hike, pledging to keep rates steady at least through the first half of 2020. July 2019 * 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 jeopardises Japan’s economic recovery. (Reporting by Daniel Leussink; Editing by Alex Richardson)