Ex-BOJ official: interest rates should go deeper into negative turf

Tokyo

THE Bank of Japan (BOJ) needs to venture much deeper into negative interest rate territory, a former deputy governor of the central bank said on Thursday, as markets sent Tokyo stocks sharply higher and the yen lower in anticipation of fresh easing action next week.

Kazumasa Iwata, now the president of the Japan Centre for Economic Research and an advisor to Prime Minister Shinzo Abe, said: "Japan needs further monetary easing." He said that if Japan were to overcome deflation, the BOJ will probably need to force policy interest rates down to as low as minus 1 per cent, from the current minus 0.1 per cent levied on banks who keep their current-account deposits with it.