Negative interest rates

[chilli]

Now I know it sounds like madness, but did Japan have negative interest rates a decade ago or so??

[clubsport]

I don't think so officially... www.economagic.com/em-cgi/data.exe/bjap/ehdis01

They got really close to zero after they tried to repair the economy once the '80s asset bubble burst.
The interest rate is monetary policy at 0% you run out of effect,,remember the fed got 0.5%

Once close to zero the japanese spent a fortune trying to reflate the economy by repurchasing Govt debt,,,literally throeing money at the economy.

I have only ever see -ve interest rates traded interbank for jpy & chf....

[axeman30]

chilli said:

Now I know it sounds like madness, but did Japan have negative interest rates a decade ago or so??

Why are you asking?

[Irish]

I thing you are referring to the time value of money.

If the interest rate is 0% and inflation is 2% the hundred pounds you put in the bank last year is only worth £98 today.

They never had negative rates i.e. borrowers paying you to take money!

PS I am not a finance guy so await correction!

>> Edited by Irish on Tuesday 6th December 14:29

>> Edited by Irish on Tuesday 6th December 14:29

[axeman30]

IIRC ( though I may not ) I think that at one stage they were either proposing or had real negative nominal IR, inflation was very low/ non existant and the economy was stagnating, and so the idea was to force consumers to start spending by charging the little feckers for the privilege of hoarding there money.

[chilli]

axeman30 said:

chilli said: Now I know it sounds like madness, but did Japan have negative interest rates a decade ago or so?? Why are you asking?

Someone in the office was quoting a guy in the Metro today, saying he borrowed heavily on a credit card at 0% and put it back with the same company earning 6%.

Was just wondering if it worked the other way round with -ve rates, and I thought i'd remembered (when I was working in a previous bank) that Yen rates were negative for a time.....

[chilli]

axeman30 said:

IIRC ( though I may not ) I think that at one stage they were either proposing or had real negative nominal IR, inflation was very low/ non existant and the economy was stagnating, and so the idea was to force consumers to start spending by charging the little feckers for the privilege of hoarding there money.

exactly what I was thinking....

[axeman30]

chilli said:

axeman30 said: chilli said: Now I know it sounds like madness, but did Japan have negative interest rates a decade ago or so?? Why are you asking? Someone in the office was quoting a guy in the Metro today, saying he borrowed heavily on a credit card at 0% and put it back with the same company earning 6%. Was just wondering if it worked the other way round with -ve rates, and I thought i'd remembered (when I was working in a previous bank) that Yen rates were negative for a time.....

Schmoozing, or whatever they call it, very clever, alot of effort for the money though, and if it gains anymore popularity you can bet that cc companies will take steps to prevent it.

[chilli]

axeman30 said:

chilli said: axeman30 said: chilli said: Now I know it sounds like madness, but did Japan have negative interest rates a decade ago or so?? Why are you asking? Someone in the office was quoting a guy in the Metro today, saying he borrowed heavily on a credit card at 0% and put it back with the same company earning 6%. Was just wondering if it worked the other way round with -ve rates, and I thought i'd remembered (when I was working in a previous bank) that Yen rates were negative for a time..... Schmoozing, or whatever they call it, very clever, alot of effort for the money though, and if it gains anymore popularity you can bet that cc companies will take steps to prevent it.

They kinda have....Most (if not all) have introduced "fees" whether its arrangement or transfer fees... Still cheap money though!!!