Bank of Japan board member Hitoshi Suzuki on Thursday warned that profits in the...
MITO, Japan - Bank of Japan board member Hitoshi Suzuki on Thursday warned that profits in the country’s financial institutions could be significantly hurt by rising credit costs if the economy slides into recession.
“If the default rate of borrowers rises, banks would have to set aside more allowances for bad debt. We need to be mindful that financial institutions’ profits could then worsen rapidly,” said Suzuki, a former commercial banker. “There’s a risk inflation won’t accelerate much for a prolonged period, as companies remain cautious of raising wages and households are sensitive to price rises,” he said.
In a speech a year ago, he said the BOJ could raise interest rates or slow the purchase of risky assets if the costs of prolonged easing began to outweigh the benefits.
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