Zero Rates Would Trouble Money Markets, BoJ Official Says

By IBTimes Staff Reporter | June 05 2009 8:28 AM

RTTNews - Reducing interest rates to zero could cause troubles for the functioning of money markets, a senior Bank of Japan official said Friday.

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Retaining market functioning with positive interest rates is crucial, BoJ Executive Director Hiroshi Nakaso said in Tokyo. In May, the central bank had kept its key interest rate unchanged at 0.1%, where it remained since December last year.

Further, he said there are some early signs of stabilization in global financial markets. However, he said central banks must closely watch developments in the markets, as their outlook remains uncertain.

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