BOJ Shirai: Negative rate on excess reserves risks hurting market functions

[TOKYO] Bank of Japan board member Sayuri Shirai said the central bank has maintained a positive interest rate on excess reserves parked at the BOJ because a negative rate may harm the intermediary function of financial institutions.

Mr Shirai, speaking at a panel discussion in Brussels on Tuesday, said the possibility of cutting the rate on excess reserves could not be ruled out but such a move should be properly discussed taking into account the differences in market structures around the world.

Mr Shirai, in a text of the speech issued on Wednesday, also said that once a rising price trend takes hold from the latter half of the current fiscal year to next March, inflation expectations would head gradually towards 2 per cent.

REUTERS