Most Young Bank Employees Experience Positive Interest Rates for the First Time
Experienced Executives Share Know-How, Online Training
As the Bank of Japan (BOJ) is expected to announce the end of its negative interest rate policy at the monetary policy meeting on the 18th-19th, major foreign media reported on the 18th (local time) that some commercial banks are educating their employees about the changes that a rate hike will bring.
According to the reports, Kyoto Bank in Japan is conducting training for about 3,300 employees on the importance of interest rates, how to set loan interest rates, and the impact of rising rates on customers and the bank's business. With interest rates expected to rise for the first time in 17 years, there is a growing need to educate employees who have no experience lending money or withdrawing deposits in a positive interest rate environment.
Kyoto Bank plans to enable executives who experienced Japan's high-interest rate era to share their know-how on persuading borrowers to accept higher rates with younger employees. Additionally, the bank has produced a 30-minute online training video that can be watched on smartphones to help employees prepare for intensified competition in attracting deposits.
They also plan to provide practical guidelines on how to increase customers' deposit amounts through sophisticated communication with loan customers after explaining the possibility of loan interest rate increases. Tadashi Shimamoto, deputy head of Kyoto Bank’s Human Resources and General Affairs Department, explained, "For younger employees, who have spent their entire careers with interest rates stuck at zero, the positive interest rate era is an unknown territory. It is important to make their mindset flexible so they can prepare for any interest rate direction that is decided."
Meanwhile, Japan has maintained policy interest rates below zero for decades due to prolonged deflation and economic stagnation. In particular, it implemented an extreme monetary easing policy by introducing negative interest rates in 2016. The BOJ has maintained the stance that the negative interest rate policy can only end once a "virtuous cycle of rising prices and wages" is confirmed. However, with inflation exceeding the BOJ’s 2% target for over a year, expectations are growing that negative interest rates may be lifted as early as Tuesday. This optimism is further supported by this year’s wage increase rate, which was recorded at 5.28%, 1.48 percentage points higher than last year.
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