Japan has been looking for an opportunity to revive the economy and contribute to the business activity growth. The quantitative easing measures in form of huge money infusions have been used for a long time, but they were considered as short-term. The Land of the Rising Sun find the solution in the policy of negative interest rates. Japan has applied a negative deposit interest rate since February 2016. Now it is not profitable for commercial banks to keep money in the Central Bank. Shinzo Abe (Japanese Prime Minister) and Haruhiko Kuroda (the Bank of Japan Governor) are convinced that these measures are effective and will show the result soon. Although most Japanese consider them too difficult to understand and do not believe in their fruitfulness.
The main goals of actual policy are both the reducing the yen price and getting the Nikkei Index growth. However, we were able to monitor the prevalence of the downward trend for the pair USD/JPY since the beginning of the year, that nullifies all the efforts of the Japanese regulator. But the authorities do not give up, they believe the policy of negative interest rates is aimed to reduce borrowings that will influence the price trends in time. Today the situation in the Japanese real economy sector is alarming. Both export of Japanese industry and cash infusion in the housing market are cut, the amount of debt monetization is increased. For the first time ever, 10-Year bonds have been sold with a negative yield at the auction after the negative interest rates implementation. Сollapse occurred: investors had to pay the government for an opportunity to borrow.
Bank of Japan Governer Kuroda associates Japanese monetary policy with the famous Peter Pan`s saying: "The moment you doubt whether you can fly, you cease for ever to be able to do it".
Giving such an example, he emphasized the need to have positive attitude to reformations. Moreover, the real situation is alarming. At the end of December, 2015, the consumer price index was 0.1%, while it was expected to reach 2%. Industrial slump is noted at 1.4%, when the decline in GDP is likely to be 0.8%. The above problems emerged during the Bank of Japan session (03/15/2016). Therefore, the meeting has been held with no strong statements and decisions: the interest rate has been left at the same level of -0.1%, the monetary base has been expanded to 80 trillion yen per year. The improvement of the negative interest rates policy was also discussed.
Finally, it should be noted that in the light of recent events in Japan the new qualitative and quantitative benchmarks for upgrading of its economy have to be looked for.