TOKYO, Oct 5 (Reuters) - Former Japanese Economy Minister Heizo Takenaka said on Wednesday the Bank of Japan will lower its minus 0.1 percent interest rate further to achieve its 2 percent inflation target.
Takenaka, professor emeritus of Keio University and a member of a government panel on investment, told Reuters in an interview that the BOJ’s new policy framework is “orthodox” and it was not necessarily a big change.
As for pushing the rate it sets on some excess deposits that commercial banks park with the BOJ further into negative territory, he said, “The BOJ will do so without doubt.”
The prominent economist added, “The important issue is that people need to acknowledge that the BOJ’s policy has yielded significant effects.”
The negative rate, introduced in February, hurts banks because they have avoided passing it along as a charge on deposits. The BOJ last month changed policy, shifting its target from the amount of money it pumps into the economy to trying to control the bond yield curve to keep longer-term rates above short-term rates. (Reporting by Kaori Kaneko, Yuji Aso and Izumi Nakagawa; Editing by William Mallard and Simon Cameron-Moore)