The Bank of Japan on Friday became the latest central bank to move its deposit rate into negative territory.
By doing so, the BOJ thrust the theme of monetary-policy divergence—which market strategists pointed to as the main driver behind the dollar’s aggressive rally between the summer of 2014 and early 2015—back into the spotlight.
You can read more about the significance of the Bank of Japan’s decision here.
Negative interest rates are an ultramodern phenomenon; the product of a global financial system still struggling to reinvigorate economic growth in the wake of the global financial crisis.
The era of negative interest rates began in July 2012 when the Denmark National Bank set its deposit rate below zero to protect its economy from an influx of hot money as the eurozone debt crisis escalated.
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