Major Japanese Banks Increase Deposit Interest Rates After Bank of Japan Policy Shift

Following a significant shift in monetary policy by the Bank of Japan, the nation's largest banks have moved to increase deposit interest rates. This change comes after the central bank's historic decision to abandon its negative interest rate policy, setting the stage for its first interest rate rise in nearly two decades.

Interest Rates on the Rise

The three leading banks in Japan, namely Mitsubishi UFJ Bank, Sumitomo Mitsui Banking Corporation, and Mizuho Bank, have all declared their intentions to elevate the rates offered on deposit accounts. This is an attempt by these financial institutions to realign with the Bank of Japan's new policy direction, which is aimed at normalizing the country's monetary environment after a long period of ultra-low interest rates.

Details of Rate Adjustments

Mitsubishi UFJ Bank is setting the pace with an announcement that interest rates on ordinary deposits will increase from a miniscule 0.001% to 0.02%. This adjustment, due to start from March 21, represents a twentyfold increase. Moreover, there will be a concurrent rise in the interest rates for various fixed deposits in yen. For instance, the rate for a one-year fixed deposit will be adjusted upwards from 0.002% to 0.025%.

Following suit, Sumitomo Mitsui Banking Corporation has communicated its plans to hike the rate on ordinary deposits to 0.02% effective April 1. Like its industry peer, it also intends to increase the rates on fixed deposits.

Not to be outdone, Mizuho Bank is similarly gearing up to revise its interest rates for ordinary and fixed deposits upwards. Although precise figures and effective dates have not been disclosed, an increase consistent with the actions of the other two banks is expected.

interest, banks, Japan