BOJ’s Ueda flags options on policy target upon ending negative rates

By Leika Kihara and Tetsushi Kajimoto

TOKYO (Reuters) -Bank of Japan Governor Kazuo Ueda said on Thursday the central bank has several options on which interest rates to target once it pulls short-term borrowing cost out of negative territory.

The BOJ could keep targeting the interest rate it applies to reserves financial institutions parked with the central bank or revert to a policy targeting the overnight call rate, Ueda said.

“We have not made a decision yet on which interest rate to target once we end our negative interest rate policy,” he told parliament.

The BOJ currently applies a 0.1% charge on a small pool of reserves under its negative interest rate policy, which was put in place in 2016 to keep borrowing costs ultra-low.

With inflation exceeding the BOJ’s 2% target for more than a year, many market players expect the central bank to end negative interest rates sometime next year.

(Reporting by Leika Kihara and Tetsushi Kajimoto; Editing by Chang-Ran Kim and Sam Holmes)