Trillions of yen of financial support hasn’t been enough to win over Japan’s commercial banks, with the majority of lenders still vehemently opposed to the central bank’s negative interest rate policy.
While the Bank of Japan’s ¥75 trillion ($700 billion) of measures to prop up lending during the pandemic are welcome help, senior banking sector officials interviewed by Bloomberg said the prevailing view in the industry remains that the profit-draining negative rate should never be lowered and should be scrapped altogether.
The comments suggest that even in the middle of an economic crisis, the hurdle for the BOJ to make greater use of its interest rate policy remains extremely high, with other central banks around the world also feeling reluctant to lower or experiment with negative rates.