AXA - BoJ hammering JGB yields with negative rate

At its January policy meeting, the Bank of Japan (BoJ) decided to introduce negative interest rates on bank reserves (-0.1%) with a tiered system. Even though additional easing was a clear possibility in our view, this move came as a surprise given that policymakers had repeatedly ruled out negative rates as a policy option. A few days before that, BoJ Governor Kuroda had mentioned in his Parliament testimony that he was “not considering it seriously”. Other members had opposed it as well, in particular Ms. Shirai and Mr. Kiuchi. The decision was indeed taken with a tight majority of 5-4, with Ms. Shirai dissenting for the first time.