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BOJ reviews negative rate policy www3.nhk.or.jp
Officials at the Bank of Japan are reviewing the effectiveness of a negative-interest rate policy they introduced 6 months ago.
A key goal of the negative rate was to help pull the country out of deflation. But many experts say it has done little to boost consumption and investment. The unprecedented policy is also under fire from commercial banks.
BOJ officials on February 16th started applying a minus rate to a portion of the balances held by commercial banks at the central bank.
This means the financial institutions have to pay a fee on some of the funds they park at the BOJ. The aim is to encourage them to increase their lending to businesses and individuals.
Borrowing costs in general have come down during the past 6 months, pushing mortgage rates to record-low levels. Many people have refinanced their home loans.
Companies are also taking advantage of low interest rates by issuing corporate bonds.
Analysts at major brokerage Nomura Securities say total corporate bonds issued in Japan from January to July reached 59 billion dollars. That's about 15 billion dollars more than the same period last year.
But the negative-rate policy is starting to hurt the profitability of commercial banks.
BOJ officials say they will review the benefits and side effects of their monetary measures, including the negative rate, at their upcoming meeting in September.
Published Date:2016-08-16
