MNI BRIEF: BOJ: Scheme To Ease Impact Of Lower Negative Rates

The Bank of Japan board is introducing a new scheme to mitigate the unfavourable impact of a further drop in negative interest rates on banks' profitability.

"Cutting short- and long-term interest rates is an important option as a nimble and effective additional easing measure. It is appropriate to cut those rates while considering the impact on the functioning of financial intermediation," the BOJ said.

The bank said it "will apply certain interest rates as an incentive to financial institutions' current account balances, corresponding to the amount outstanding of funds that have been provided through its various fund-provisioning measures to promote financial institutions' lending." The applied interest rates will be linked to the short-term policy rate.