| TOKYO, Sept 16
TOKYO, Sept 16 Japan's finance industry
continued to lobby against any deepening of negative interest
rates by the central bank ahead of a closely-watched rate review
next week, with the head of the life insurance lobby warning on
Friday that rate cuts would do more harm than good to the
Sources have told Reuters the Bank of Japan will make
negative rates a centrepiece of future monetary easing at next
week's rate review by shifting its prime policy target to
interest rates from the pace of money printing.
Akio Negishi, chairman of the Life Insurance Association of
Japan, said he did not see the need for the BOJ to ease again
any time soon with the economy on a steady recovery track.
"Negative rates squeeze financial institutions' profits.
Sharp declines in long- and super-long bond yields have more
demerits for the economy as it hurts public sentiment" by
fuelling uncertainty over future pension payments, he told a
"Given the current state of the economy, I don't think the
BOJ needs to deepen negative rates," Negishi said, adding that
his comments on BOJ policy were his views as president of Meiji
Yasuda Life Insurance Co.
The head of Japan's banking lobby also voiced opposition to
deeper negative rates on Thursday, saying that negative rates
have had little positive effects on the economy.
"We haven't heard from companies that (negative rates) are
spurring positive activity," Takeshi Kunibe, chairman of the
Japanese Bankers Association, told a news conference. He added
that the industry may need to consider charging fees for
deposits if the BOJ were to deepen negative rates.
The finance industry's criticism on negative rates is in
contrast to a growing acceptance over the policy among
politicians. Japan's top government spokesman said negative
rates have had some merits for the economy.
An adviser to Prime Minister Shinzo Abe said on Friday the
benefits of the negative rate policy are "very big" as it
encourages corporate debt issuance and lowers mortgage rates.
In January, the BOJ decided to add negative rates to its
massive asset-buying programme in a renewed effort to accelerate
inflation to its 2 percent target.
But the move has drawn criticism from financial institutions
for squeezing their already-thin margins. Some academics warn
that negative rates may dampen consumer sentiment by making
households wary that their pension and insurance payments may be
eroded by ultra-low rates.
(Additional reporting by Fuse Taro and Stanley White; Editing
by Jacqueline Wong)