On March 18, the Bank of Japan (BoJ) brought the country out of its eight-year long experiment with negative interest rates by raising borrowing costs for the first time in 17 years. Market reaction was telling. The yen sold off while the Nikkei 225 rallied. Typically, the reaction to a not-fully-priced rate hike might have been the opposite: the currency strengthens and the equity market sells off. But there is something of a conundrum about negative rates: rather than stimulate growth as envisioned, they instead act as a tax on the banking system. The idea of negative deposit rates is to discourage excess savings ... (full story)