(Bloomberg) -- Japan’s regional banks called on the Bank of Japan to scrap its negative interest rate when executives met with central bank officials last month, according to people familiar with the matter.

Toshiyuki Kumagai, the president of the Second Association of Regional Banks, requested a review of the negative rate policy, according to the people, who asked not to be named. While the association has called for an end to the subzero rate previously, the latest meeting — held on Nov. 16 — comes as the central bank is seeking input for its broad policy review. 

The BOJ is looking back on the past quarter century of monetary policy and its effects, and the conclusions are likely to help shape policy over coming years.

The head of the association also expressed hope that the bank would normalize policy when the timing is right. Senior BOJ officials including Governor Kazuo Ueda and representatives from the regional banking association attended the meeting, the people said. A BOJ spokesperson declined to comment on the meeting, and the banking association didn’t respond to requests for comment.

The request likely served as a fresh reminder for Ueda of the side effects of the world’s last subzero rate. The governor has pledged to continue easing until the bank’s inflation goal is met while officials weigh merits and demerits of the policy. The request may further strengthen the view among most BOJ watchers that a rate hike will take place by the middle of next year.

The bank’s next policy board meeting will conclude on Dec. 19.

Read More: BOJ Holds Off on Giving Policy Hints at First Review Workshop 

There are merits and demerits to prolonged monetary easing, but the negative rate has squeezed profits by shrinking interest margins, Kumagai said, according to the people. He also acknowledged that easy policy has supported the overall economy to a certain extent, they said. 


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