Japan's bank lobby welcomes BOJ decision not to deepen negative interest rates

TOKYO (Reuters) - Japanese banks welcome the Bank of Japan’s (BOJ) decision to keep monetary policy steady instead of deepening negative interest rates which could further squeeze banks’ profits, the head of the country’s banking lobby said on Thursday.

The BOJ on Thursday announced that it had maintained its policy while signalling the chance of expanding stimulus as early as its next policy meeting in October.

The BOJ maintained its short-term interest rate target at -0.1% and a pledge to guide 10-year government bond yields around 0% under its yield curve control (YCC) policy.

“I frankly welcome the BOJ’s decision to defer deepening negative interest rates,” Makoto Takashima, chairman of the Japanese Bankers Association, told reporters at a monthly news conference.

“It’s doubtful that deepening negative interest rates is effective for monetary easing.”

Japanese banks have struggled with years of near-zero interest rates that have made traditional lending barely profitable.

Takashima said charging account holders a fee should be discussed separately from monetary policy. Mitsui Trust Bank Ltd would consider the option if the BOJ decides to deepen negative interest rates, the Sankei newspaper reported on Wednesday.

Reporting by Takashi Umekawa and Takaya Yamaguchi; Editing by Raissa Kasolowsky