Negative interest rates won't solve Japan's problems: Rabobank

Adopting negative interest rates for the first time on Friday, Bank of Japan (BoJ) reduced its interest rates to 0.1 percent from zero. This move will trigger other central banks to come out with equally ridiculous policies, says Michael Every of Rabobank.Speaking top CNBC-TV18, Every says he does not expect negative interest rates to solve Japan's problems.Below is the verbatim transcript of Michael Every's interview with Latha Venkatesh on CNBC-TV18.Q: How should we read this, will this be good enough to engender some bit of green on the Japanese screen, even the Asian screens?A: In the near-term, absolutely we have already seen a big pickup in the stock market. We will see a further big pickup in the stock market largely because the currency has dropped from around 118 to around 121 against the US dollar and that is an initial reaction. There had been whispers that the Bank of Japan (BoJ) was going to do something. They were stating just a few weeks ago that everything was fine and that their forecast held solid and firm and I didn't see any reason to do anything. Naturally of course you can't trust central bankers when they speak nowadays. They have surprised us with negative interest rates.Is that going to solve Japan's economic problems? Not in the slightest. Is it actually going to get Japan out of the slump that has been there for decades? Not in the slightest. Will it mean a green close for equities today? Quite probably.Q: Abenomics engendered a fairly longish bit of several months of green on the Japanese screen and on some of the trading partners as well. So should we expect that we could see a little bit of a relief rally in Asian markets? It could last for a month or so you think?A: The half life of these measures is getting shorter and shorter. So, it is difficult to say if it would last a month. If your narrowest focus is whether or not equities are going to go up within the next few days or weeks then yes this is clearly a negative signal, at least for Japanese equities. I don't think it is going to help Chinese equities very much because Japan is getting cheaper relative to them again. Korea too is also going to be probably negatively impacted.However, the Japanese equities, yes, in the near-term, it is positive. I am just trying to look at the bigger picture to underline the fact that pushing interest rates from virtually zero to below zero is just more of a downward spiral that is going to force other central banks to introduce equally ridiculous policies going forward and it doesn't solve any problem, it just pushes them on to somebody else's shoulders.