The Bank of Japan is now even more unlikely to lower its negative interest rate following a move to cushion its impact on regional banks, according to a former BOJ official.
The BOJ’s offer of 0.1% interest on some reserves at eligible local banks reflects its growing concern over the health of the regional banking sector, according to Atsushi Miyanoya, a former executive director who was in charge of assessing the financial system at the central bank.
"Theoretically, monetary policy is independent from prudential policy,” said Miyanoya, in an interview last week. "But diving deeper into negative rates is probably difficult after this.”