Having adopted a negative interest rate on excess reserves to penalize certain financial institutions to leave money idle, the Bank Japan may consider helping to lend by providing a negative rate on certain loans, according to people familiar with the negotiations BOJ.
such a discussion could occur along any decision to make a deeper cut to negative current rate on reserves, said the people, who asked not to be identified as the matter is private . Stimulating Bank Lending Facility BOJ, which now offers loans at zero percent interest, would be the most likely vehicle for this option, they said.
Officials said that adding it to the arsenal of the central bank may have a positive effect have an impact on the economy, but would also raise questions on grants to commercial lenders. Financial institutions, which already feel penalized by the existing negative rate, could face claims of borrowers to reduce their credit lines further, said the people.
Bank shares rallied on optimism the measure could be adopted, and the yen fell. Economists at BNP Paribas SA, Credit Suisse Group AG and Morgan Stanley MUFG Securities are among those who anticipated the possibility of the BOJ adopt such a measure.
Current Size
The Bank of Japan extended ¥ 24400000000000 (223 billion $) of the credit for the stimulation mechanism Bank of the loan as of April 10. This initiative is separated at the heart of monetary easing initiative of the Bank of Japan, which is an expansion of the monetary base, mainly through bond purchases State. It was initiated by the former governor of the Bank of Japan Masaaki Shirakawa in December 2012.
The BOJ next meets to set policy council April 27-28 and analysts have increasingly seen the probability of some kind of action to counter the yen's appreciation and damage to inflation expectations; 23 of 41 analysts surveyed by Bloomberg predict a certain stage. Nineteen forecast increase in cash purchases traded eight projects a boost in buying bonds and eight see a rate cut, the survey shows.
Against the dollar, the yen slid 1 percent to 110.58 at 16:59 in Tokyo from, helping pare some of the appreciation of the currency since BOJ policymakers last met. Governor Haruhiko Kuroda noted its concerns about a stronger yen in an interview with the Wall Street Journal last week. This feeling is shared by senior officials at the central bank, people familiar with the talks said earlier this week.
European makers have also taken a step towards providing subsidized funds for banks to lend to their clients. In a program set to start in June, the European Central Bank is ready to offer a zero-rate financing, which could retroactively be cut deposit rates of the ECB - currently less than 0.4 percent - depending on how the lender extends to companies and households. The installation is known TLTRO-II.
Loan Officer Survey
In Japan, where the rate of sub-zero became effective in February, a survey of credit managers showed this week that the profit margins of banks lending to highly rated companies fell to the lowest level in nearly a decade. quarterly survey from the Bank of Japan also showed that credit demand from large, medium and small sizes, all abandoned.
"This does not solve the underlying structural problem for banks, which is a ready supply problem but a question of demand," wrote Jefferies analysts Group LLC, y including Mac Salman in a report.
the BOJ said its biannual report on Friday that its monetary easing financial system with a negative interest rate "will put additional downward pressure on financial institutions to profits moment. "
bank shares, which were hammered after the unveiling January the Bank of Japan to a negative rate on a portion of the money they parked at the central bank, jumped Friday. the Topix banks index closed 4.8 percent higher, exceeding the Topix index.
Takashi Shiono, an economist at Credit Suisse in Tokyo, said he hopes the BOJ d introduce negative rate for loans in conjunction with a cut in the rate on excess reserves.
"the BOJ can say it will help the whole economy because the banking sector is one of the channels most vital for monetary policy, "said Shiono Friday.
UBS Aoki Daiju Group AG said the demand for business loans has been weak to begin with, to find borrowers remain difficult.
"These measures alone BOJ may not work effectively unless it is working with the government," said Aoki. "A policy mix with fiscal spending or growth strategy stimulates private demand is needed."
Bloomberg
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