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Last week, the Bank of Japan issued a statement titled "Five Minutes Understanding Negative Rate", taking the form of assuming someone asked a question and then answering it. We have screened out important information for readers, condensed the content of 5 minutes into 1 minute and finished reading. The main content is as follows:
Question: Are you really implementing negative interest rates?
Answer: In the past three years, the Bank of Japan has been implementing a large-scale monetary easing policy, which is called
quantitative qualitative easing" or "easing varying degrees". In January, in order to enhance the effectiveness of the easing policy, we began to implement negative interest rates.
Question: Will the deposits I deposit in the bank decrease?
Answer: Negative interest rates are only applicable to some funds deposited by banks in the Bank of Japan. Personal savings are another matter.
Question: Therefore, the personal savings interest rate will not become negative in the future?
Answer: The negative interest rate in Europe is much lower than the negative interest rate of the Bank of Japan, but the personal savings interest rate has not yet become negative.
Question: Even if they do not use negative interest rates now, will the interest rate fall a little further?
Answer: The interest rate of ordinary savings accounts was 0.02%, but now it is 0.001%.
Question: Is negative interest rates not conducive to consumption?
Answer: If you had 1 million yen in the bank for one year, you could have received 200 yen interest, but now it is only 10 yen. This situation is not enough to harm consumption at present, right?
Question: You could have only received 200 yen interest? Is that also very low?
Answer: Right. In 1999, the annual interest rate for deposits of 1 million yen was less than 1,000 yen. For more than 15 years, deposit interest rates have been very low because we have "deflation".
Q: What is deflation?
A: That is, prices are falling every year. Deflation has been staying in Japan for 15 years.
Q: What are the disadvantages of falling prices?
A: Due to deflation, prices do not rise, corporate sales do not increase, and wages do not rise. Within three years of implementation of the "loose policies of varying degrees", corporate profits have indeed begun to grow, and the spring basic wage increase has also started again. If deflation disappears, wages will rise every year.
Question: Does deflation mean interest rates are also low?
Answer: If interest rates rise under deflation or inflation fall, it will further damage the economy, and wages and prices will fall further. Although the number of unemployed people in Japan did not increase significantly during the deflation period, it is because the interest rate is very low.
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