The Daily Manila Shimbun

 

Kuroda vows patience as negative rate pains spread after 3 years

February 17, 2019



Tokyo--Bank of Japan Governor Haruhiko Kuroda has vowed to remain patient in maintaining accommodative monetary conditions, as the side effects of the BOJ's negative interest rate policy are increasingly visible.

"We'll continue with monetary easing with patience," Kuroda said at a parliamentary meeting on Wednesday, ahead of the third anniversary on Saturday of the central bank's introduction of the negative rate policy.

The BOJ chief highlighted the bank's commitment to maintaining its current massive easing campaign, including the negative rate policy, with the aim of achieving 2 pct inflation.

Three years ago, the BOJ began to impose an interest rate of minus 0.1 pct, or levy a 0.1 pct penalty, on part of financial institutions' current account deposits at the central bank.

Despite the BOJ's campaign, inflation has remained sluggish in Japan, and the BOJ appears to be far from normalizing its monetary policy at present.

The prolonged low-interest environment is weighing heavily on commercial banks, particularly regional lenders.

Among regional banks, Musashino Bank <8336>, based in the city of Saitama, and Tochigi Bank <8550>, based in Utsunomiya, Tochigi Prefecture, swung into net losses in April-December due to narrower lending margins. Numazu, Shizuoka Prefecture-based Suruga Bank <8358>, hit by a fraudulent loan scandal, also fell into the red.

Koji Fujiwara, chairman of the Japanese Bankers Association and president and chief executive officer of Mizuho Bank, called on the BOJ to become flexible about its 2 pct inflation target.

The BOJ "shouldn't stick to 2 pct," Fujiwara told a press conference on Thursday.

He suggested that the negative rate policy's side effects may now be eclipsing its positive implications. "The time is coming to reconsider" the policy, he said. Jiji Press