Japanese banks are unlikely to apply negative interest rates to deposits held by retail customers, Bank of Japan Gov. Haruhiko Kuroda said Thursday.
“Of course, the BOJ will consider additional monetary easing if necessary,” Kuroda told a House of Representatives Budget Committee meeting, showing readiness to lower interest rates further into negative territory.
But “individuals’ deposits will not become subject to negative interest rates,” he added, citing experience in Europe, where the European Central Bank has introduced negative interest rates.
Kuroda’s remarks came after the BOJ decided last Friday to apply an interest rate of minus 0.1 percent to some of the current account deposits that commercial financial institutions have at the Japanese central bank.
In response to worries that negative interest rates may hurt bank earnings, Kuroda said it only applied to some deposits.
“The biggest concern, which is about damaging the financial intermediation function, will be avoided to a considerable degree,” he said.