Japan Bank Deposits Rise at Slowest Since ’07 as Inflation Bites #JapanFinance

(Bloomberg) — Japan’s bank deposits increased at the slowest pace since April 2007 as households seek to safeguard their assets from inflation.

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Deposits climbed 0.7% in April from a year earlier, decelerating for a third straight month, according to a Bank of Japan report released Monday.

The data add to signs that Japanese households are shifting their long-held stance of holding deposits or cash, a strategy enabled by more than a decade of deflation. Cost-of-living gains have stayed above the BOJ’s 2% target for the last three years, eating at the value of assets sitting in bank accounts.

“There is a broad undercurrent to move to risky assets,” said Tsuyoshi Ueno, an economist at NLI Research Institute. “Households can’t help but feel the loss in the value of their assets after three years of more than 2% inflation. Deposits have no chance of beating inflation.”

Figures show an increase in demand for riskier assets. Households’ holdings of investment trusts rose 27.4% from a year earlier at the end of December, according to the BOJ’s latest quarterly flow of funds report.

While Japanese banks have raised deposit rates since the BOJ scrapped its negative interest-rate policy and hiked the benchmark three times since March of last year, they remain low. The average deposit rate was 0.182% in April, according to central bank data, compared with overall inflation of 3.6% in March.

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