Japan’s negative rates deepening policy divide

(From Nikkei Asian Review)

By Ryo Saeki, Nikkei staff writer

The Bank of Japan’s negative interest policy has sent already-low deposit rates to near zero and money market rates sliding into uncharted territory. And this unconventional new pillar of monetary policy is further dividing a policy board already of two minds about its massive easing program.

Bank of Japan building in Tokyo

Bank of Japan building in Tokyo

Introducing negative rates now will have little effect, board member Koji Ishida, who voted against the measure last month, told reporters Feb. 18. He argued that private-sector interest rates are unlikely to fall further and that increasing lending much beyond current levels will be difficult given that banks are working hard enough on that front already.

This is a marked contrast to the rosier view of Gov. Haruhiko Kuroda and other central bank officials, who hold that the policy is having its intended impact. The measure’s passage by a narrow 5-4 majority also left the impression that the split within the policy board had widened. Read more

Categories: Asia Unhedged, Japan

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