Economy51 minutes ago (Dec 01, 2021 09:55PM ET)
© Reuters. FILE PHOTO: A security guard walks past in front of the Bank of Japan headquarters in Tokyo, Japan January 23, 2019. REUTERS/Issei Kato/File Photo
By Leika Kihara
TOKYO (Reuters) – The Bank of Japan will continue to seek ways to improve its policy framework to mitigate the cost of monetary easing, board member Hitoshi Suzuki said, warning of the strain prolonged ultra-low interest rates could inflict on bank profits.
Japan’s banking sector remains stable and corporate funding pressures are easing, though any further delay in the nation’s economic recovery could increase credit costs for financial institutions, said Suzuki, a former commercial banker.
“We will continue to seek room to further improve our monetary policy by carefully weighing the effect and cost of monetary easing,” Suzuki said in a speech on Thursday.
“In doing so, I believe we must pay close attention to the accumulating cost of monetary easing.”
Suzuki has voted with the majority of the board in maintaining the BOJ’s massive stimulus programme, but has repeatedly warned of the earnings hit to banks from prolonged ultra-low rates.
In March, the BOJ fine-tuned its monetary policy framework to make it more sustainable including by allowing bond yields to move more flexibly around its 0% target.
Suzuki said Japan’s economy is set to continue recovering but warned that growth may undershoot expectations if the spread of the Omicron coronavirus variant hurts consumption, or supply bottlenecks persist.
“If the impact of supply constraints are bigger or lasts longer than expected, there’s a risk economic growth may further undershoot expectations” next year, Suzuki said.
Japan has lagged other advanced nations in its economic recovery from the covid-19 pandemic as state of emergency curbs to combat the virus weighed on consumption.
While the Sept. 30 lifting of the curbs has given rise to hopes of a rebound in consumption, supply bottlenecks and parts shortages have disrupted manufacturers’ production and weighed on the export-reliant economy.
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.
Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.