Japan's central bank urged to avoid deepening negative rates

TOKYO (Reuters) - The Bank of Japan should avoid deepening negative rates, which would further pressure profits, the head of a lobby group of regional banks said, after the central bank vowed to examine measures to make its monetary easing framework more effective.

"The monetary easing was effective in terms of Japan's economic growth, but it also had significant impact on regional banks' profits," said Yasuyoshi Oya, the chairman of the Regional Banks Association of Japan.

"We would like the BOJ to avoid deepening negative rates," he told an online news briefing.

The combined net interest income of 64 regional banks dropped about 6% in fiscal 2019 from fiscal 2015, when the BOJ introduced its negative rates, data compiled by the group shows.

In December, the central bank unveiled a plan to study more effective ways to reach its inflation target of 2% inflation, following U.S. and European peers as a renewed spike in virus infections threatened to derail a fragile recovery.

(Reporting by Takashi Umekawa; Editing by Clarence Fernandez)