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Negative interest rates an act of desperation driven by failure - Nomura

FXStreet (Delhi) – Richard Koo, Research Analyst at Nomura, suggests that in his view, the adoption of negative interest rates is an act of desperation born out of despair over the inability of quantitative easing and inflation targeting to produce the desired results.

Key Quotes

“That monetary policy has come this far is a clear indication that both ECB President Mario Draghi and BOJ Governor Haruhiko Kuroda have fundamentally misunderstood the ongoing recession.

To begin with, despite the all-out efforts of central banks in Japan, the US, the UK and Europe, neither quantitative easing nor inflation targeting were able to achieve their initial objectives.

The BOJ has now pushed back the date when it expects to achieve its inflation target from “around the second half of fiscal 2016” to “around the first half of fiscal 2017,” which would be fully four years into the Kuroda/Iwata era.”

USD/JPY catches fresh bid, recovers to 119.85

The USD/JPY pair bounced-off lows ahead of hourly 200-SMA at 119.33 and rebounded sharply higher in early Europe, now heading towards 120 handle.
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SARB has delivered; now it’s the turn of FinMin Gordhan – RBS

Gabor Ambrus, Market Economist at RBS, suggests that with its 50bp rate hike and a promise to deliver more, the SARB made an important first step last week towards restoring South Africa’s battered credibility.
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