Kuroda's negative rate surprise shocked his own BOJ board, minutes show

The Bank of Japan's 2016 decision to introduce negative interest rates faced significant internal opposition, according to newly released policy meeting minutes. The move, which aimed to stimulate growth and counter a strong yen, was approved by a slim 5-4 margin, highlighting deep divisions within the board.

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It's wise to avoid falling into such a futile game.

Several board members expressed strong reservations, with some labeling the policy as "half-baked" and hastily prepared. Concerns were raised that the policy could trigger a "futile game" of currency devaluation with Europe, potentially harming Japan's export-reliant economy. Board member Takehiro Sato warned against such a competitive devaluation, while Koji Ishida argued that further rate cuts would do little to boost lending.

Former BOJ chief Haruhiko Kuroda pushed the policy despite the dissent, even after publicly ruling out negative rates just days prior. Board member Sayuri Shirai questioned the necessity of such a radical step, stating the economy was not worsening enough to justify it. Takahide Kiuchi expressed "extreme doubt" about the measure's feasibility without thorough deliberation on its economic impact.

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It appears to be half-baked and prepared in a hurry.

The Bank of Japan has since ended its negative rate policy and other unconventional measures. Under current Governor Kazuo Ueda, the BOJ has faced its own challenges in achieving board consensus, with recent policy decisions drawing dissent from members with differing views on the economic outlook and the path for interest rates.

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Markets would be very surprised and could move quite a bit temporarily. But that's not the purpose of what we do.