BOJ estimates serious impact of rate cut on regional financial firms – The Mainichi
|The Bank of Japan (BOJ) has studied that if the short-term interest rates are slashed further then it will reduce profits at financial institutions by several hundred billion yen, the Japanese daily ‘The Mainichi’ reported citing sources with knowledge of the matter.
Additional takeaways
The internal calculations were made when the BOJ conducted a review of its policy tools in March to make monetary easing more effective and sustainable.
The Japanese central bank considered a scenario in which short-term interest rates, currently at minus 0.1 percent, are cut to minus 0.2 percent.
The BOJ decided not to make the estimate public due to concern it would draw attention to the negative side of cutting interest rates.
A cut in short-term interest rates would lower lending rates for companies and households, meaning lower profitability for financial institutions.
Compared with major banking groups that have overseas operations, regional banks are more dependent on domestic operations and more susceptible to the BOJ's rate cuts.
USD/JPY holds steady above 110.00
USD/JPY stalls its overnight declines, taking a breather above 110.00 before the bearish momentum picks up pace once again.
The spot was last seen trading better bid at 110.20, having hit daily lows at 110.12.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.