Major Japanese banks are beginning to raise interest rates on time deposits, reflecting a rise in long-term government bond yields following monetary policy tweaks by the Bank of Japan.
Time deposit rate hikes were announced by MUFG Bank on Wednesday and by Sumitomo Mitsui Trust Bank on Thursday. Sumitomo Mitsui Banking and Mizuho Bank also plan to raise their rates.
Deposit rates have been at extremely low levels for many years under the BOJ’s massive monetary easing.
Sumitomo Mitsui Trust Bank’s planned time deposit rate hike will be its first since it was created through the merger of its predecessors in 2012. On Monday, it will raise the interest rate on five-year deposits that cannot be canceled until maturity to 0.1% from 0.01%, and also increase the rates on five- to eight-year deposits that can be canceled before maturity.
MUFG Bank will raise its rates on five- to 10-year deposits on Monday, with the 10-year rate rising to 0.2% from 0.002%.
Sumitomo Mitsui Banking is planning a similar interest rate hike, while Mizuho Bank has said it is considering a rate increase.
The BOJ decided at its July policy meeting to effectively allow 10-year Japanese government bond yields to rise as high as 1%, up from its previous upper limit of 0.5%, and decided at the latest policy meeting this week to allow the yields to exceed 1% to some extent.
Following the policy revisions, the benchmark 10-year JGB yield, which major banks use to set their rates on long-term time deposits, has risen to near 1%.
At the same time, the BOJ policy revisions have also led to a rise in housing loan rates.