Bank of Japan’s Kuroda sees possibility of deepening negative rates

By Leika Kihara

TOKYO, March 17 (Reuters) – Bank of Japan Governor Haruhiko Kuroda said on Friday there was scope to cut interest rates further into negative territory, but could not say by how much.

As part of yield curve control, the Bank of Japan applies an interest rate of -0.1% to a small pool of bank reserves. It is also guiding the yield on 10-year bonds around 0% as part of its efforts to sustainably reach its inflation target of 2%.

Kuroda told Japan’s parliament that while it was possible to push short-term interest rates into more negative territory, cutting them to -2% or -3% would cause a “huge disruption” in the banking system, making it difficult .

“It would be difficult to lower short-term and long-term interest rates just by going deeper into negative (short-term) rates,” Kuroda said, stressing the importance of continuing to buy government bonds. State.

Kuroda will retire at the end of his second five-year term in April.

(Reporting by Leika Kihara; Spanish edited by Benjamín Mejías Valencia)