The current key discount rate at the Bank of Japan, which has stood at a record low for two years, is good for the economy, the vice finance minister said Sept. 8.
Takeshi Komura said after looking at the positive and negative effects of the present easy-money policy, he believes the current rate level is a benefit. "We commend the decisions that the Bank of Japan has made on this matter," Komura told a news conference. Sept. 8 marked the start of the third year in which the discount rate has been held at 0.5 percent.
The BOJ had decided to lower the rate to help the economy and buoy balance sheets for financial institutions that were suffering from a heavy burden of nonperforming loans. Many observers say a rise in the discount rate any time soon is unlikely amid various economic indexes showing that personal spending has been hit hard by the consumption tax hike in April and economic growth remains sluggish.
Meanwhile, Shoichiro Toyoda, chairman of Japan Federation of Economic Organizations (Keidanren), said Sept. 8 the current low interest rate should be raised.
"The level of interest rates in Japan is low by world standards. Although the rates can be low on a temporary basis, it is not good that they continue for a long time," Toyoda said at a news conference. Toyoda said the rates should be raised to help those who live on interest from their savings.