Bank of Japan (BOJ) are more open to discussing the possibility of expanding stimulus and may consider reducing rates further into the negative territory at their board meeting on Sept 18-19, sources familiar with the matter say, according to Reuters.
As of now, BOJ’s short-term interest rate target is -0.1%.
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Deepening negative interest rates will be among key options if the BOJ were to ease, although the central bank may need to accompany that with measures to mitigate the pain any such move could inflict on financial institutions.
The pickup in global growth is taking longer than expected, which could affect Japan’s output gap and hurt domestic demand. If risks to Japan’s economy are deemed too high, there’s a chance the BOJ may act.
The BOJ’s current policy framework targets interest rates, so it makes logical sense to consider moving around the targets first.
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