Bank of Japan closely watching impact of easy policy on bank profits: Kuroda

NAGOYA, Japan (Reuters) – Bank of Japan Governor Haruhiko Kuroda said on Monday the central bank was closely watching the potential damage a prolonged ultra-easy policy could have on financial institutions’ profits as it makes policy decisions.

“The BOJ is mindful of the risk that its low-interest rate policy, if prolonged, could weigh on financial institutions’ profits” and discourage them from boosting lending, Kuroda said in a speech to business leaders in Nagoya, central Japan.

For now, such a risk was not a serious one because financial institutions have a sufficient buffer against declining profits, Kuroda added.

Under a policy framework adopted last year, the BOJ now guides short-term interest rates at minus 0.1 percent and the 10-year government bond yield around zero percent.

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