Many Banks in Japan Raise Deposit Rates after BOJ Action

   Tokyo, May 6 (Jiji Press)--Many large and regional banks in Japan raised their interest rates on ordinary deposits in March or April for the first time in about 17 years, following the Bank of Japan's lifting of its negative interest rate policy.
   Also, some banks, mainly online banks, increased floating interest rates on their housing loan products after the central bank at its March 18-19 Policy Board meeting decided to scrap the negative rate policy and guide the unsecured overnight call rate, the benchmark short-term interbank lending rate in Japan, to around zero to 0.1 pct in its first rate hike in 17 years.
   Under the negative interest rate regime, the BOJ had set the rate at minus 0.1 pct on part of commercial financial institutions' current account deposits at the central bank.
   The BOJ decision on the new call rate target, viewed as a step toward rectifying the country's ultralow interest rate environment that lasted for many years, was welcomed by the banking industry. Higher interest rates allow banks to reap higher profits from their mainline lending operations, thanks to wider gaps between loan interest rates and rates at which they procure funds as resources for lending.
   "The importance of gathering deposits as resources of our business operations will increase further," Masahiro Kihara, president of Mizuho Financial Group Inc., one of Japan's top three banking groups, said of the BOJ decision.

(2024/05/06-13:30)

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