Bank of Japan introduces negative interest rates of -0.1%

The Bank of Japan today introduced negative interest rate regime at its first policy review for the year. 

The Japanese central bank decided to keep an interest rate of -0.1% from its current level of 0.1%. The rate will apply to current accounts that financial institutions hold at the bank. The policy was decided by a 5-4 majority vote.

A negative interest rate means the central bank and perhaps private banks will charge negative interest; instead of receiving money on deposits, depositors must pay regularly to keep their money with the bank. This is intended to incentivise banks to lend money more freely and businesses and individuals to invest, lend, and spend money rather than pay a fee to keep it safe.

"The decision is aimed at achieving the price stability target of 2% at the earliest possible time," the central bank said in a statement. Further rate cuts will be taken if judged as necessary, it added. 

This is the first time since October 2010 that the Bank of Japan has moved interest rates, a report in the Financial Times said.