Bank of Japan adopts negative interest rate policy

Bank of Japan adopts negative interest rate policy

The Bank of Japan adopted negative interest rates for the first time at the end of its two-day policy review on Friday, buckling under pressure to ease concerns about the health of the world's third-largest economy.

In a move that was signaled by the Nikkei business daily minutes ahead of the decision, the BOJ said it will apply a rate of negative 0.1 per cent to excess reserves that financial institutions place at the bank and introduce a three-tier system on rates .

The news saw the benchmark Nikkei shoot up 3 per cent, the yen slide 2 per cent against the greenback and US stock futures rally 1 per cent.

No changes were made to the bank's government bond purchases or exchange-traded funds (ETFs).

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