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BOJ Officials Are Said to Eye Possible Negative Rate on Loans

  • Idea would add carrot to the stick of negative benchmark rate
  • Loans to banks to spur lending could be given negative rate
Updated on

Having adopted a negative interest rate on some excess reserves to penalize financial institutions for leaving money idle, the Bank of Japan may consider helping them lend by offering a negative rate on some loans, according to people familiar with talks at the BOJ.

Such a discussion could happen in conjunction with any decision to make a deeper cut to the current negative rate on reserves, said the people, who asked not to be named as the matter is private. The BOJ’s Stimulating Bank Lending Facility, which now offers loans at zero percent interest, would be the most likely vehicle for this option, they said.