This Is Why "Everyone Was Shocked" By The BOJ Announcement

Tyler Durden's picture

There is just one phrase to explain the market's reaction to last night's BOJ announcement that it would join the ECB, Sweden, Denmark, and Switzerland into negative territory: stunned shock.

As the WSJ writes, "many investors had anticipated an expansion of the bank’s asset-purchasing program this year, but few expected Japan to join the European Central Bank and central banks of Sweden, Denmark and Switzerland in negative territory on Friday."

Reuters add that "there’s a significant surprise factor: almost no economist was calling for this,” according to Alex Dryden, global market strategist at JP Morgan Asset Management.

And so on.

But if nobody expected negative rates out of the BOJ last night, there's a good reason for this: just one week ago Kuroda himself said on the record that he has "no plan to adopt negative rates now"

This was reported by Reuters on January 21, exactly one week before the BOJ announcement:

Bank of Japan Governor Haruhiko Kuroda said he is not thinking of adopting a negative interest rate policy now, signalling that any further monetary easing will likely take the form of an expansion of its current massive asset-buying programme.


"There are pros and cons of adopting negative interest rates ... The Federal Reserve didn't adopt negative interest rates and yet, its policy succeeded in stimulating the U.S. economy," he told parliament on Thursday.


Kuroda has maintained his optimism on Japan's economy, saying that it continues to recover moderately and is helping keep inflation on a broad uptrend. But he identified the recent global market rout as among risks to Japan's economic outlook, stressing the central bank's readiness to expand monetary stimulus if needed to ensure achievement of its 2 percent inflation target.

It seems someone made an urgent phone call into the BOJ over the next 7 days, because the next Reuters headline is the following:

From the piece:

The Bank of Japan unexpectedly cut a benchmark interest rate below zero on Friday, stunning investors with another bold move to stimulate the economy as volatile markets and slowing global growth threaten its efforts to overcome deflation.


Global equities jumped, the yen tumbled and sovereign bonds rallied after the BOJ said it would charge for a portion of bank reserves parked with the institution, an aggressive policy pioneered by the European Central Bank (ECB).


"What's important is to show people that the BOJ is strongly committed to achieving 2 percent inflation and that it will do whatever it takes to achieve it," BOJ Governor Haruhiko Kuroda told a news conference after the decision.

We disagree: what is far more important is that the BOJ, just like the Fed which admitted one week ago it hikes rates just as the economy was slowing, has demonstrated it has absolutely no clue either what it is doing, and certainly no idea how to properly communicate with the markets. For now the response is positive. We give the BOJ's action of sheer panic and desperation a half-life of a few days before the euphoria fully fizzles as China is forced to retaliate to this latest bomb explosion in an increasingly more violent global currency war.

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
NoDebt's picture

Put under the heading:  When things get serious you have to lie.

Alternate heading:  Nothing is confirmed until it is officially denied.


VinceFostersGhost's picture



They were going to do what else again?

Uchtdorf's picture

Be men and commit seppuku...or not.

ArkansasAngie's picture

Whatcha goin to do about it China?  


The aburdities are breath taking

Squid-puppets a-go-go's picture

yes, im a broken record. But no-one in the MSM seems to be sayin it, so let me repeat

NIRP is the direct destruction of capital

kinda dumb way to solve a crisis caused by too much debt, eh?

Father Thyme's picture
Father Thyme (not verified) Squid-puppets a-go-go Jan 29, 2016 8:37 AM

"Negative Interest" is an oxymoron.

new game's picture

so this will gets the japs to spend? ok...

marathonman's picture

When things get serious you have to lie.  It's ALWAYS serious.....

Aaaarghh's picture

i get to finish reading the article, and you lot have already commented everything going on in my head...I need to start speed reading.

DeadFred's picture

LOL cutting rates below zero will INCREASE inflation somehow. Smart people looking through the prisms of erroneous theories can be SOOO dumb and never notice it. Tyler, there's no way the this surge lasts a couple days. Even the dumbest MSM shill has to smell desperation in this move

Prediction Nikkei is below 17200 (yesterday's US close level) by EOD

USisCorrupt's picture

I agree with the last statement in the article, China NEEDS to do a 20-25% devaluation ALL at Once and POP this PONZI Paper Balloon !

Sunday Night would be PERFECT Timing !

Enceladus's picture

You have to comment on the article to know whats in the article ~N. Polosi

Scooby Doo's picture

That's what I was wondering?  Take away earning interest on any money in the bank & actually charge a fee to have money there will stimulate spending?  Maybe on more mattresses to hide withdrawn money inside....

Sanity Bear's picture

I dunno about that, I find I have negative interest in a lot of things nowadays.

Amish Hacker's picture

Me too. I'm caring less and less about more and more.

RiverRoad's picture

This the way the world ends.  This is the way the world ends. This is the way the world ends.....not with a bang but a NIRP.

Apologies to ee cummings

Nikki Alexis's picture


I know it's a busy time but when you get a chance can you provide a list of all the countries with NIRP?

Terminus C's picture


You could use this fantastic tool called a search engine.

Sorry to be snippy but this insidious need for others to find, do, or get things for us is the root of all of our problems today.

new game's picture

hey, i know you're busy, but could you come over and wipe my ass?

did mommy wash and fold your clothes til 24 and graduated?

Nikki Alexis's picture

Plus great commentary... except for pussies like you

Nikki Alexis's picture

But nobody does it like the Tyler's

Tall Tom's picture

And where do you think that the Tylers get their information???


Some of it comes from us.


It is your job to appreciate (add value) to what the Tylers do.

Tall Tom's picture

So at least four people believe that it is their job to depreciate what Tyler does and extract value from Tyler, or detract, as the case may be.


If it is not appeciative then it is depreciative. That is not just a Financial Truth.




Check the downarrows on this post as you have the log.


You will have a good idea as to who are playing the role of Judas on this site.

DavidAKZ's picture

Read the articel please 

but few expected Japan to join the European Central Bank and central banks of Sweden, Denmark and Switzerland in negative territory on Friday."

XuscitizenSweden's picture


The japps want to keep their right to sushi protected but/and eat it simultaneously..... Eat Cake but still have the Same-Amount-Remaining.


Why not Harry-Carry? Harrikari is better........


Death to the Japanese Rothschilds !!!; those slanted-eye joo motherfuckers would surely agree.


Remember the very very old joke done with 2 hands & 2 eyes(?), "My Mother is Chinese, My Father is Japanese.....and......I'm Crazy".


btw Have A Great Weekend Z-hedgers!

Regards X-

EscapeKey's picture

Nothing, of course. Because we're seeing a period of continued growth and economic expansion. Green shoots are so yesterday.

That's why all the central banks are easing, one after another. Because of the soundness of the relative economies.

Dapper Dan's picture

"The world will soon wake up to the reality that everyone is broke and can collect nothing from the bankrupt, who are owed unlimited amounts by the insolvent, who are attempting to make late payments on a bank holiday in the wrong country, with an unacceptable currency, against defaulted collateral, of which nobody is sure who holds title."

actionjacksonbrownie's picture

I agree... except for the "waking up" part.

HardAssets's picture

Will this hurry up and all come crashing down already ?

I have a few relatives with long time anti-gold smirks on their faces, that I would like see erased.

NoDebt's picture

When the BOJ is NIRPing, sure 'tis like a morn in spring.

In the lilt of Kuroda's laughter, you can hear the angels sing.

When Japanese hearts are happy, all the world seems bright and gay,

And When the BOJ is NIRPing, sure, they steal your heart away.


Be happy, Vince.  There is no alternative.

Father Thyme's picture
Father Thyme (not verified) NoDebt Jan 29, 2016 8:25 AM

8 days in January is a long, long time.

bania's picture

... And Conspiracy theory until it becomes fact, etc.

MountainsRoam's picture

World 'crazy' to give central bankers power: Faber

iggenFlot's picture
iggenFlot (not verified) NoDebt Jan 29, 2016 9:59 AM

The people want easy women and easy money. Give the people what they want.

chubbar's picture

I really loved the part where it was a big shock because no economist had seen it coming! BWA HA HA HA!

Are you fucking kidding me? How many of these assfucks have mentioned that a monetary system dependent upon constantly increasing debt DOESN"T FUCKING WORK in the long haul?

So we essentially have a bunch of so called economists commenting on what they think a few cogs are doing within the wheel but can't see the whole shebang is going off a cliff! It just doesn't get anymore fucked up than this.

BandGap's picture

Making a break for the door.

Why would anyone be surprised? Desparate times require desparate measures.

ShorTed's picture

More like desparate times require insanity: doing the same (keyensian) idiocy over and over and expecting a different result.  It's funny that the mkts still eat this shit up.

ArkansasAngie's picture

It's Friday.

Bad news is good.  Horse manure.  

BandGap's picture

Almost like the markets were programmed machines......

EscapeKey's picture

“We're not going to monetize the debt,” --Bernanke

Let The Wurlitzer Play's picture

The must finally realize how bad they fucked up everything.