Amadeusz Juskowiak

Japan to promote interest rate liberalisation

The Bank of Japan decided at a policy board meeting to promote further interest rate liberalisation by lowering the minimum denomination of regulationfree large deposits and by raising the interest rate ceiling on money market certificates MMCs a central bank official said

The new guideline will go into effect on April 6 the bank said

Under the guideline the minimum denomination of regulationfree large deposits will be lowered to 100 mln yen from 300 mln

The interest rate ceiling of MMCs with maturities of between one year and two years will be set at 05 percentage point below the prevailing certificate of deposit rate the bank said

But the ceiling on MMCs with maturities of one year or less will remain the same or 075 percentage point below the CD rates

The minimum denomination of MMCs will be lowered to 10 mln yen from 30 mln

The bank also said time deposit rates will be lowered by 037 point effective March 16 in line with the halfpoint cut in the official discount rate on February 23

New interest rates on twoyear and oneyear deposits at banks for example will be 364 pct and 339 pct per annum respectively

Demand deposit rates however will remain the same