Banking News

BOJ won't rule out increasing negative rate cut

BOJ won’t rule out increasing negative rate cut

(17 August 2016 – Japan) The Bank of Japan (BOJ) will not rule out deepening a cut to negative rates it introduced in February, a Japanese paper quoted Governor Haruhiko Kuroda as saying.

In an interview with the newspaper, Kuroda said the BOJ's negative rate policy has not reached its limits.

"The degree of negative rates introduced by European central banks is bigger than Japan. Technically there definitely is room for a further cut," Kuroda said.

In January, the BOJ set a minus 0.1 percent rate on some deposits that banks place at the central bank, with the move taking effect from February – a move that negatively surprised markets.

The central bank hoped the shift to negative rates would encourage banks to lend more, spurring higher spending and inflation, however those outcomes have not eventuated at this point in time.

Additionally, the BOJ will also consider whether to make any changes to the 80 trillion yen (A$1.05 trillion) per year massive asset-purchase plan once the outcome of a comprehensive assessment of its monetary policies is out in September, Kuroda said.

The asset purchases are a key part of the central bank's "quantitative and qualitative easing" program which first started in 2013, aimed at achieving its 2 percent inflation target.

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