Japan’s bank lobby urges BOJ caution on deepening negative rates By Reuters

© Reuters. FILE PHOTO: A man wearing a protective mask walks past the headquarters of the Bank of Japan amid the coronavirus disease (COVID-19) outbreak in Tokyo, Japan, May 22, 2020.REUTERS/Kim Kyung-Hoon/File Photo

By Leika Kihara

TOKYO (Reuters) -Japan’s central bank should be cautious about deepening negative interest rates as such a move could have a “very big” impact on lenders’ earnings, the head of a lobby of regional banks said.

Japanese commercial banks have been vocal opponents of the Bank of Japan’s negative rate policy, as years of ultra-low rates erode their profits and add to woes such as a dwindling population and intensifying competition.

Regional lobby chief Hisashi Shibata said the BOJ’s massive stimulus programme had supported the economy by keeping borrowing costs low for companies hit by the coronavirus pandemic.

“On the other hand, the BOJ’s policies have narrowed bank margins and their side-effects are materialising,” Shibata, who took over the rotating role of the bank lobby’s chief on Wednesday, told a news conference.

The central bank has created several schemes since last year to mitigate the pain inflicted on lenders by its negative rate policy and spur regional lenders to further revitalise their business.

These include a scheme for the BOJ to pay interest to lenders that tap it for funds to boost lending, a move the central bank said was aimed at convincing markets it would cut rates, if needed to support the economy.

“Even after the creation of this new scheme, I hope the BOJ takes a cautious stance about deepening negative rates,” Shibata, who is also president of regional lender Shizuoka Bank, told the conference.

The BOJ in March moved to make its stimulus programme sustainable enough to weather a prolonged battle to fire up inflation to a target of 2%.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

{n.callMethod? n.callMethod.apply(n,arguments):n.queue.push(arguments)};
s.parentNode.insertBefore(t,s)}(window, document,’script’,
fbq(‘init’, ‘751110881643258’);
fbq(‘track’, ‘PageView’);

by : Reuters

Source link

Capital Media

Read Previous

Brent gains a fifth day as demand outlook improves, stocks fall By Reuters

Read Next

La Tanzanie veut se connecter par fibre optique à la RD Congo, après le Burundi, le Malawi, le Rwanda…