FLJP - Bank Of Japan Gives Up On Negative Rates A Bottom For The Yen?

2024-03-22 13:25:18 ET

Summary

• This week, the Bank of Japan concluded its negative interest rate policy it previously initiated in 2016 to help stimulate inflation, which shook up the FX market.
• The BOJ's policy shift has stimulated the Japanese markets and devalued the Yen, signaling bullish prospects for the economy (and potential for increased consumer purchasing power if the Yen strengthens).
• Currency volatility could prove both a risk and a driver of returns moving forward. Investors are recommended to follow the BOJ's optimism with caution.

Introduction

The Bank of Japan, or "Nichigin" (??), finally ended its experiment with negative interest rates this week. Since 2016, in an attempt to create synthetic inflation, Nichigin has kept their key interest rate below 0%, effectively charging to keep deposits. This was meant to create a pressure on consumers to spend more and save less....

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