OREANDA-NEWS. Fitch Ratings says the Bank of Japan's introduction of a negative interest rate on a portion of bank reserve balances in January 2016 is still struggling to find traction in markets and the real economy.

Understanding of unorthodox monetary policies and of the risks that may be associated with them is limited. A reduction in the Bank of Japan's perceived room for policy manoeuvre would weaken the support that Japan's 'A'/Stable sovereign credit rating receives from high macroeconomic policy flexibility.

It is still too early to assess the effectiveness of the negative interest rate policy in combating deflation, but indications so far in 2016 - in consumer prices, business expectations and banks' lending attitudes - are not encouraging.