The Federal Reserve has already raised interest rates twice this year.
Japan's very low rates could affect banks
Financial experts worry that that the Bank of Japan's shockingly low interest rates could affect Japanese banks' business, as a Reuters survey disclosed on Wednesday.
BOJ Governor Haruhiko Kuroda pointed to this possibility when he referring to a "reversal rate" or the decisive level where major bank rate cuts can painfully impact the Japanese economy by simply squeezing lending margins to a level where Japanese banks lose interest in making loans.
The previous week, Kuroda told that the BOJ might cancel its crisis-mode stimulus, warning of the risk that excessive stimulus could undermine financial institutions’ health.
28 of 36 market experts surveyed during December 4-12 told that they worried about the negative impact the BOJ's policy could have on financial institutions. Five experts told they nearly didn’t care about it.
Additionally, 17 of 35 market experts told that recent remarks by BOJ board members on the reversal rate wouldn’t impact the BOJ’s monetary policy. However, 13 are assured that such comments suggest Japan’s key financial institution refrains from extra easing.
On Monday, the US dollar index plunged from 96.40 to 95.70.
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