Kuroda Lagging Behind ECB's Negative Rates Shows Limited Options
- ECB deposit rate now 40 basis points lower than Bank of Japan
- Lenders say a lower rate would undermine Japan easing targets
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Now that the European Central Bank has cut its deposit rate, while the Bank of Japan has held policy for more than a year, concerns are growing that Governor Haruhiko Kuroda has little room for maneuver.
The ECB lowered the rate it pays banks on their overnight reserves by 10 basis points on Thursday to minus 0.3 percent, boosted its quantitative easing plan to include regional debt and extended the policy until at least March 2017. The BOJ can’t cut its similar rate of 0.1 percent because that may lead to an insufficient pool of bonds it buys to expand the monetary base, said Mizuho Bank Ltd. and Totan Research Co. It may need to change its policy framework, they say.