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2016年3月22日 (火)

マイナス金利 弊害広げない方策を

--The Asahi Shimbun, March 20
EDITORIAL: BOJ needs exit strategy for negative interest rate policy
(社説)マイナス金利 弊害広げない方策を

One month has passed since the Bank of Japan took the risky and controversial move to introduce negative interest rates after it had almost run out of policy tools to enhance its aggressive “quantitative” monetary easing program.

It is hardly possible to claim that this policy gamble has produced the expected positive results overall.

The BOJ’s action has achieved a further decline in long-term interest rates from their already record-low levels.

But the move to push interest rates below zero has given an unexpectedly big jolt to financial markets, causing wild fluctuations in both stock prices and currency exchange rates in the ensuing weeks.

The banking sector has criticized the negative interest rate policy, which is expected to deliver a blow to the earnings of lenders. Commercial banks are facing an increase in costs as the BOJ charges them 0.1 percent for their excess reserves at the central bank.

Banks have also come under strong pressure to further cut their lending rates, which are already at historical lows.

That would be fine as long as lower lending rates goose demand for loans. But that doesn’t seem to be what is happening.

Banks have found that lower-rate mortgages have led to an increase in refinancing but failed to stoke demand for new housing loans.

The monetary easing policy was intended to prompt banks to expand their lending and encourage companies to ramp up their business investments. But the BOJ’s latest move seems counterproductive because it has only made things harder for commercial banks.

The negative interest rate policy is also beginning to blight the BOJ’s efforts to awaken inflationary expectations among consumers and businesses through its “different dimension” easing.

In an Asahi Shimbun opinion poll conducted in February, 60 percent of respondents said they do not expect the negative interest rate policy to lead to economic growth.

Foreign regulators and policymakers have voiced concerns that any expansion of the negative interest rate policies that are in place in Japan and Europe could trigger a global currency war, or competitive devaluations of currencies among major economic powers to gain a trade advantage.

The biggest beneficiary of the BOJ’s surprise policy move is probably Japan’s public finances. A further decline in long-term rates reduces the debt-servicing costs of the government, which has run up more than 1,000 trillion yen in debts.

As a result, however, there seems to be growing political momentum for relaxing fiscal discipline.

Under ordinary circumstances, the central bank should not adopt the extremely radical approach of buying huge amounts of government bonds for monetary expansion.

The BOJ’s unconventional policy, however, has been condoned as a measure to allow the government to buy time to fix its finances.

But some policymakers within the Abe administration are now openly arguing for postponing the consumption tax hike slated for next year. The administration appears to have the wrong idea about what should be the top fiscal policy priority.

The BOJ’s monetary policy is now beginning to cause significant harm to the Japanese economy. If the BOJ continues this extraordinary monetary expansion program in a desperate effort to achieve its seemingly unrealistic 2-percent inflation target, the range of challenges confronting the Japanese economy will only become more serious and complicated.

The central bank cannot quickly terminate its unprecedented policy even if it wants to because an abrupt end to the program would cause unacceptably large harmful effects on financial markets regarding interest and exchange rates.

Instead of wading deeper into uncharted waters, the BOJ should start working out a strategy for winding up the program while minimizing the negative consequences.


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