Courtesy of Mish.
In an obvious attempt to boost the Japanese stock market the Bank of Japan discusses further cuts in its already negative interest rate policy.
How deep is the rabbit hole?
Supposedly it’s “theoretically possible for negative 0.5 percent”.
Bloomberg reports Kuroda Says Minus 0.5% Rate Is Theoretically Possible for Japan.
The Bank of Japan has quite a lot of room to cut its key interest rate further and theoretically it could go to minus 0.5 percent, Governor Haruhiko Kuroda said in parliament Wednesday.
Questioned by a lawmaker in parliament Wednesday, he agreed that it would be theoretically possible to lower the rate to 0.5 percent.
Economists surveyed by Bloomberg have judged that a further cut to the negative-rate policy is the most likely tool. Kuroda said Tuesday that he doesn’t need to wait to see the full impact of the negative rate before acting again, if change is needed.
Economic Theory
As long as we are discussing “theory” why not -1.0%?
Why not -5.0%?
If that sounds preposterous please note that Monetarist Fools Have Suggested -10%.
The fool in question is Professor economics professor Gregory Mankiw. I replied to his theoretical nonsense in Economist Mankiw Defends Policy of Theft.
