The pool of global debt with sub-zero yields fell yesterday, Tuesday, to $686 billion, after registering more than $11 trillion at the end of 2021, as the wave of tightening of global interest rates this year has pushed the bonds in first bear market in a generation. The Bank of Japan’s sudden decision to widen the trading band for the 10-year yield sent bonds tumbling around the world as investors became convinced that the latest major central bank to stick to the ultra-accommodative policy has been in vogue for most of the past decade or more, it seemed to finally succumb to the restrictive approach.
The Bank of Japan is keeping interest rates low despite global monetary tightening
Reconsider the effectiveness of monetary policy
“What we are seeing is a re-examination of the effectiveness of ultra-loose monetary policy,” said Stephen Miller, former head of fixed income at BlackRock Inc. in Australia and now with GSFM Pty. “The Bank of Japan is the latest institution in the middle of it all. I hope this is the end of negative interest rates because that would mean we would stop relying on central banks to do everything. Now we know that negative rates are ineffective and let’s stop there.”
Japan’s inflation rate hit its fastest level in 40 years in October, adding to questions about the need for continued stimulus, especially after the yen’s plunge to its weakest level in more than 30 years sparked unrest across the globe. country.
