BOJ Deputy Governor Himino Says Real Rates Stay Low as Bank Lending Expands at a Fast Pace

BOJ Deputy Governor Ryozo Himino stated that real interest rates remain low while bank lending is expanding at a fast pace, signaling that the central bank sees monetary conditions as still accommodative despite the ongoing policy normalization. The transmission channel here runs through the real rate differential: with inflation running above the policy rate, real borrowing costs stay negative, which supports credit demand and loan growth at Japanese banks. Japanese megabanks and regional lenders are the most directly exposed, since faster loan growth lifts net interest income while the still-thin gap between deposit and lending rates determines how much of the policy move flows through to margins. Bank equities are therefore sensitive to any shift in the BOJ's rate path, as a faster tightening would compress real-rate support for lending volumes even as it widens spreads. Traders should watch the BOJ's next monetary policy meeting and the monthly bank lending data from the Bank of Japan for signs of whether credit growth is sustaining its pace under the current rate settings.

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