{"id":17110,"date":"2016-01-29T21:08:58","date_gmt":"2016-01-30T02:08:58","guid":{"rendered":"http:\/\/olduvai.ca\/?p=17110"},"modified":"2016-01-29T21:09:40","modified_gmt":"2016-01-30T02:09:40","slug":"the-disturbing-reasons-why-the-bank-of-japan-stunned-everyone-with-negative-rates","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=17110","title":{"rendered":"The Disturbing Reasons Why The Bank Of Japan Stunned Everyone With Negative Rates"},"content":{"rendered":"

The Disturbing Reasons Why The Bank Of Japan Stunned Everyone With Negative Rates<\/a><\/h3>\n
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As we noted earlier, in a\u00a0paradoxical U-turn<\/a>, one which caught\u00a0everyone\u00a0<\/strong>by surprise as a result of\u00a0Kuroda’s own promise\u00a0<\/em>just one week ago\u00a0not to engage in NIRP<\/a>…<\/p>\n

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\"\"<\/a><\/p>\n

… and two months after the ECB’s December 3 disappointing announcement led to a historic surge in the EUR, today countless macro hedge funds have been left reeling with huge losses once again, as many had recently turned bullish on the Yen…<\/p>\n

\"\"<\/a><\/p>\n

… only to be eviscerated by the BOJ’s negative rates announcement.<\/p>\n

So what happened?\u00a0Reuters has an amusing take<\/a>, one which we doubt many macro HFs will find quite entertaining:<\/p>\n

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Bank of Japan Governor Haruhiko Kuroda used classic shock tactics on Friday to push through his latest unconventional monetary policy of negative rates:\u00a0deny, then strike<\/em>.<\/strong><\/div>\n<\/blockquote>\n

The paradox, of course, is that by “striking”, Kuroda slammed precisely those who were meant to benefit the most from the BOJ’s action: financial institutions. To be sure, it is not just hedge funds who will be left reeling but Japanese banks themselves, because as a result of negative rates, their NIM will go horizontal and lead to even more pronounced losses, something European banks –\u00a0such as Deutsche Bank\u00a0<\/a>– have discovered the hard way over the past year and a half.<\/p>\n

There are other problems with the BOJ’s seemingly chaotic, if not panicked, decision: as Reuters adds, “a razor-thin 5-4 vote underscores the difficulty Kuroda had in winning enough board backing for his shock tactic, and illustrates the doubts among board members about the governor’s line that by sticking to a 2 percent inflation goal the BOJ can make people believe prices will rise.”<\/p>\n

…click on the above link to read the rest of the article…<\/p>\n<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

The Disturbing Reasons Why The Bank Of Japan Stunned Everyone With Negative Rates As we noted earlier, in a\u00a0paradoxical U-turn, one which caught\u00a0everyone\u00a0by surprise as a result of\u00a0Kuroda’s own promise\u00a0just one week ago\u00a0not to engage in NIRP… … and two months after the ECB’s December 3 disappointing announcement led to a historic surge in the […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[57,124,7708,172,193,1839,233,282,376,452,534,558,10141,683,775,1478,4318],"class_list":["post-17110","post","type-post","status-publish","format-standard","hentry","category-economics","tag-bank-of-japan","tag-central-banks","tag-core-cpi","tag-cpi","tag-davos","tag-deutsche-bank","tag-ecb","tag-european-central-bank","tag-goldman-sachs","tag-japan","tag-monetary-policy","tag-negative-interest-rates","tag-nim","tag-reuters","tag-switzerland","tag-yen","tag-zerohedge"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/17110","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=17110"}],"version-history":[{"count":2,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/17110\/revisions"}],"predecessor-version":[{"id":17112,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/17110\/revisions\/17112"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=17110"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=17110"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=17110"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}