A Study On The Implement And Enlightenment Of Japan’s Negative Interest Rate Policy

After the economic collapse in the 1990s,Japan has been in deflation for a long time. In 1999 the bank of Japan announced the implementation of the zero interest rate policy,since then the ultra-low interest rates monetary policy has always been a main tool of the bank of Japan to cope with deflation. After the subprime crisis, in the face of insufficient domestic demand, excess of public debt, lacking of bank loans, the bank of Japan tends to further enlarge the boundaries of the low interest rate policy. January 2016, bank of Japan announced to add negative interest rate policy into the quantitative easing monetary policy, the financial institutions’ deposit account is divided into three part, which apply to positive, zero, negative rates, which aims to stimulus the needs of bond purchases, improve market expectations of inflation. After policy was implemented,bond yields turned into a negative value,the relevant interest rates are at historic lows,but domestic demand and inflation expectations are still not improved, the effect of negative interest rate policy is limited.Japan’s negative interest rates policy broke the limitation of zero lower bound,providing a thought for solving deflation problem. This article will research the practice and effect of Japanese negative interest rates policy. This paper will clarify thedevelopment of Japan’s low interest rate policy, in the 1990 s the bank of Japan introduced zero interest rate policy,which developed into negative interest rates policy after the subprime crisis. Then the article will discuss transmission mechanism of the practice of the policy, coupled with market performance after policy was implemented.Finally, combined with the economic structure of Japan, the article will summarize the applicability and limitations of negative interest rates policy, at the same time provide new ideas and suggestions for the government of Japan to solve the problem of deflation.