In a scheduled speech on Thursday, the Bank of Japan (BOJ) board member Hitoshi Suzuki said that the central bank must be mindful demerits of prolonged, low-interest-rate environment accumulating, which could Affect Japan’s financial system stability.
Additional quotes
“Massive low-rate loans offered to pandemic-hit firms could push down financial institutions’ margin for a longer period of time.”
“Part of banks’ increasing loans to pandemic-hit firms could sour, push up banks’ credit costs.”
“If second, third wave of infections emerges, Japan commercial banks’ credit costs could balloon to levels hit during Lehman crisis.”
“Effect of monetary easing could be curtailed if firms pile up savings instead of using profits to boost wages, capex.”
“BOJ’s monetary policy framework is functioning, benefits of monetary easing exceeding costs for now.”
Market reaction
USD/JPY trims losses to keep its range around 106.00 following the comments from the BOJ policymaker Suzuki. Investors eye Fed Chair Jerome Powell’s speech for fresh direction.
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