The Bank of Japan just can’t catch a break no matter what it does.

To prevent the Japanese economy from sliding back into the stagnation of the past two decades and move onto a path of growth, world events just conspire against it.

Kuroda at BOJ press conference announcing negative rate.
BOJ Governor Haruhiko Kuroda at press conference announcing negative rates.

For three years the BOJ has been trying to hit a target of 2% inflation with a series of asset purchases. This monetary easing succeeded in lifting stock prices and weakening the yen, but that could all unravel with falling commodity prices and economic slowdowns in China and other emerging markets

So, on Friday, Japan’s central bank made the unexpected, and some say desperate, move, of setting the country’s first negative interest rates.

“I think it’s economic kamikaze,” Peter Boockvar, chief market analyst for the Lindsey Group said on CNBC. “Let’s tax money and hope things get better. Let’s create higher inflation for the Japanese people, who are barely seeing wage growth. And let’s amp up the currency battles, and hope everything gets better.”

The move stunned the global markets, but appeared to have the desired effect. Stock markets around the world rallied, with the Nikkei Stock Average jumping up 2.8%, and the yen falling as much as 2.1% hitting 121.33 to the dollar.

Japanese government bonds sank to record lows, with the two- and five-year yields both hitting as low as 0.085%.

Around the world, all the major European stock indexes rose more than 1%. In Asia, the Hang Seng Index jumped 2.5% and the Shanghai Stock Exchange Composite Index leapt 3%. All the US, stock indexes were up  more than 1%.

Japanese media reports on Friday said the BOJ’s interest rate move was tied to poor retail sales figures released earlier this week. The action was described as a bid to shore up Prime Minister Shinzo Abe’s ailing Abenomics formula to energize Japan’s economy. Abenomics sustained another severe blow on Thursday when Economics Minister Akira Amari stepped down amid graft allegations. Amari is the key architect of the PM’s Abenomics program and his departure will likely cause confusion at the helm.

Negative interest rates are an aggressive policy pioneered by the European Central Bank, which charges banks to store excess reserves. It’s a desperate move that shows the BOJ doesn’t have many policy option left in its arsenal to get the economy moving.

Already, the central bank is buying 80 trillion yen ($674 billion) in assets a year. This has brought nearly a third of Japan’s massive bond market in its hands.

Some analysts say this move by the BOJ hurt the US Federal Reserve’s plans to lift interest rates later this year.

“If this means now that they’re out of bullets with [quantitative easing], and this is their last hope, then I think this is a mess,” Boockvar  said.

Boockvar said he believes it’s a fallacy that Japan needs inflation to generate growth.

“Inflation readings are a symptom of what underlying growth is,” Boockvar said. “For Kuroda to think ‘I need to generate higher inflation to generate growth’ to me is completely backwards, especially when Japanese wage growth is so anemic. You’re basically penalizing the Japanese consumer, and I don’t know what economic theory is behind that.”

The BOJ now forecasts core inflation to average 0.2 to 1.2 percent between April 2016 and March 2017.

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