BOJ Making Further Efforts to Turnaround the Deflationary Trends

BOJ Making Further Efforts to Turnaround the Deflationary TrendsBoosting spending and investments tops the BOJ's agenda. The Bank of Japan hopes trimming interest rates to lower than zero rates will work to fulfill its aim but at the same time worry about inactivity and years of trivial returns could mean that savers become doubtful in keeping strides with the central bank's tune.

On Friday, BOJ made its move to charge banks for holding their reserves, starting from February16. Several of the retail banks have already started to cut their deposit rates and others are expected soon to follow their foot prints.

One among the biggest regional lenders in Japan, Bank of Yokohama Ltd. trimmed its one-year interest rate from 0.025 percent to 0.02 percent. Resona Bank, also cut its rate by half to 0.025 percent for five-year deposits.

For decades, Japan is facing deflationary trends and Haruhiko Kuroda, the Central bank governor focuses on breaking the negative mindset to get the economy more active and forward moving. However, it's not an easy task for him as his fellow citizens are compulsive savers.

The Japanese households save a lot of their earnings as financial assets, bank deposits or cash. The rate is comparatively low in the U.S and the euro zone.
 

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