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Speculation is rife that the Bank of Japan may ditch negative
rates as early as March or April given expectations that major
firms will offer higher pay rises at annual spring labour-management
talks due to wrap up March 13.
However, small firms, which conclude wage talks by June, have a
high ratio of workers' share of corporate profits, making it
difficult to raise wages further.
"While uncertainty is high, (I) oppose (ending negative rates.)
It's too early," Etsuro Honda, former special advisor to the
cabinet, told Reuters.
"Negative rates are used for inter-bank operations, which apply
risk premiums when it comes to corporations where no one's
asking for borrowing with negative rates," he said.
Honda still wields influence with policymakers and lawmakers.
Last week, he was invited to lecture a gathering of lawmakers
led by Sanae Takaichi, a former policy affairs chief at the
ruling Liberal Democratic Party and seen as potentially Japan's
first female prime minister.
Honda was an architect of the stimulus policy dubbed 'Abenomics'
- a mix of bold monetary easing, flexible fiscal policy and
reform, which helped the economy escape more than a decade of
deflation. However, the policy has failed to achieve the central
bank's 2% inflation target.
(Reporting by Tetsushi Kajimoto; Editing by Toby Chopra)
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