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

(Excerpt)

(Tuesday, February 9, 2016, 8:47 am to 8:52 am)

[Questions and answers:]

Q.

I would like to ask about the impact of the Bank of Japan’s negative interest rate policy. Yesterday, Japan Post Bank lowered interest rates on fixed-amount postal savings, widening the impact on depositors and, although markets responded with an initial rise in share prices and a drop in the yen, these proved only temporary. You cautioned that there might be some anxiety and confusion because this was the first time such a policy had been introduced. Would you say that the impact has fallen within the scope you envisioned, or has it reached a level that demands closer attention?

A.

Because this was the first time the Bank of Japan (BOJ) had ever enacted such a policy, or at least the first time in the 70-year postwar period, it was well understood that various criticisms would be leveled at the decision, which I believe was reached only after considering the pros and cons as well as other factors. I will withhold comment on moves in the government bond market. The interest rate changes stemming from the BOJ policy have impacted financial institutions, depositors and others in various ways, so it is difficult to make a sweeping assessment. In general terms, government bond holders will see valuation gains and borrowers seeking out mortgages will enjoy lower interest rates on loans. At the same time, financial institutions will receive lower interest revenue on their loans, restricting their investment tools and causing them to lower the interest rates paid to depositors, so both sides need to be considered. In any event, the government and the Bank of Japan are committed to steering the economy out of its asset deflation-based recession while giving due consideration to the government bond market. We must continue to exercise our inspection and oversight responsibilities in diligently monitoring the steps taken by financial institutions.