Press Conference by Taro Aso, Deputy Prime Minister, Minister of Finance, and Minister of State for Financial Services

(Excerpt)

(Tuesday, May 14, 2013, from 8:48 am to 8:58 am)

[Questions and answers]

Q.

The potential impact of rising long-term interest rates on the operations of financial institutions may be negative in terms of bond holding, but beneficial if lending rates increase. What is your view on this?

A.

I do not expect financial institutions to increase their lending rates without raising their deposit rates. Obviously, the deposit rates should increase along with the lending rates. The direction of bank operations would depend on each bank’s management capabilities. In addition, it would be wonderful if the demand for funding rises to the point where lending rates increase, as this would be a clear indication that more people are willing to take on loans for capital investment or for making purchases. However, I cannot really say anything at the moment as we are not yet seeing any signs of this.

(End)