Japan PM Adviser: BoJ Negative Rates Benefits 'Very Big'
Japan PM Adviser: BoJ Negative Rates Benefits 'Very Big'

Japan PM Adviser: BoJ Negative Rates Benefits 'Very Big'

Japan PM Adviser: BoJ Negative Rates Benefits 'Very Big'

The benefits of the Bank of Japan's negative interest rate policy are "very big" because it is encouraging corporate debt issuance and lowering mortgage rates, an adviser to Prime Minister Shinzo Abe said.
The policy has weighed on bank earnings in the short term, but it should be a benefit in the long term because negative rates can lead to more capital expenditure and boost consumer spending, Yasutoshi Nishimura told Reuters.
Nishimura's comments suggest the government would be open to a further decrease in negative rates as a way to get more money flowing through the economy and prevent a return to deflation.
"There are both positive and negative aspects, but I think the positive aspects are very big," said Nishimura, a ruling Liberal Democratic Party lawmaker and a former trade ministry official.
"I'm sure the BoJ will examine this policy and make the appropriate decision."
The BoJ will consider making negative interest rates the centerpiece of future monetary easing by shifting its prime policy target to interest rates from base money at its meeting next week, sources familiar with its thinking say.
The BoJ shocked investors in January by adding negative rates to its massive asset-buying program launched in 2013 to encourage inflation.
The BoJ charges commercial banks 0.1% on a small portion of reserves they keep at the central bank.
It is still uncertain whether the BoJ will cut rates further when it meets next week, but Nishimura's comments highlight positive aspects of a policy that was initially unpopular.
When first announced, some consumers feared that savings deposit rates would also go into negative territory. The policy was also unpopular among commercial banks because it reduces their earnings.
Nishimura reiterated BoJ Governor Haruhiko Kuroda's pledge that he did not adopt negative rates to target deposit rates.
Negative rates have been very successful in pushing government bond yields lower, and borrowing costs have also fallen.
Bank lending to the real estate sector has risen dramatically, leading to more real estate development.
Falling mortgage rates are also beneficial because more people can take out loans to buy new homes and people who refinance their existing mortgage will have more disposable income, Nishimura said.

Short URL : https://goo.gl/Qu2kom
  1. https://goo.gl/6GXw1V
  • https://goo.gl/oMccfr
  • https://goo.gl/Gq5hfq
  • https://goo.gl/JRHAa9
  • https://goo.gl/3Beu5t

You can also read ...

Cybercrime cost has jumped by $155 billion since 2014.
Global businesses are losing the equivalent of nearly 1% of...
Pakistan to Be Placed Back on FATF List
Pakistan will be placed back onto an international terrorism-...
US Presses India to Cut Tariffs
US businesses and diplomats are pressing India to cut tariffs...
UAE Inflation  to Rise to 3.3%
Inflation is expected to rise to 3.3% in the UAE as the 5%...
Turkey will have the widest current account deficit this year at 4.5% of GDP, followed by Argentina and Colombia.
As the US and European countries embark on a monetary...
The ECB expressed more confidence that inflation would converge over time to its 2% target.
Released within 24 hours of each other this week, the minutes...
Europe’s main London, Frankfurt and Paris markets barely budged in early moves.
A stronger dollar and slightly higher global borrowing costs...
Fitch in November affirmed the country’s BB+ stable outlook rating.
Fitch, the ratings agency that cut South Africa’s sovereign...