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MNI BRIEF: BOJ Credit Costs Worry If Stock Markets Readjust

(MNI) LONDON
TOKYO (MNI)

Bank of Japan officials are watching closely to gauge whether the strong stock market rally can help cap the cost of credit for companies, MNI understands, although they acknowledge there are still risks.

There has been a stronger-than-expected recovery in the manufacturing sector since in the BOJ released the October edition of the Financial System Report but bank officials see a risk that markets may be overheating and that global stock prices will adjust lower, which, they fear, will cause ripples through the financial markets and send a negative feedback loop to the real economy,

That enhances the risk of an increase in non-performing loans and credit costs which could undermine the stability of financial system. The BOJ's next FSR will be released in mid-April.

MNI London Bureau | +44 203-865-3812 | les.commons@marketnews.com
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MNI London Bureau | +44 203-865-3812 | les.commons@marketnews.com
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