Bank of Japan Gov. <person>Haruhiko Kuroda</person> has vowed to remain patient in maintaining accommodative monetary conditions, as the side effects of the central bank’s negative interest rate policy are increasingly visible.

“We’ll continue with monetary easing with patience,” <person>Kuroda</person> said at a parliamentary meeting on Wednesday, ahead of the third anniversary Feb. 16 of the central bank’s introduction of the negative rate policy.

The Bank of Japan chief highlighted the bank’s commitment to maintaining its current massive easing campaign, including the negative rate policy, with the aim of achieving 2 percent inflation.

Three years ago, the Bank of Japan began to impose an interest rate of minus 0.1 percent, in effect a levy of 0.1 percent, on part of financial institutions’ current account deposits at the central bank.

Despite the central bank’s campaign, inflation has remained sluggish in Japan, and the Bank of Japan appears to be far from normalizing its monetary policy at present.

The prolonged low-interest environment is weighing heavily on commercial banks, particularly regional lenders.

Among regional banks, Musashino Bank, based in the city of Saitama, and Tochigi Bank, based in Utsunomiya, swung into net losses in April-December due to narrower lending margins. Numazu, Shizuoka Prefecture-based Suruga Bank, hit by a fraudulent loan scandal, also fell into the red.

<person>Koji Fujiwara</person>, chairman of the Japanese Bankers Association and president and chief executive officer of Mizuho Bank, called on the Bank of Japan to become flexible about its 2 percent inflation target.

The central bank “shouldn’t stick to 2 percent,” <person>Fujiwara</person> told a press conference on Thursday.

He suggested that the negative rate policy’s side effects may now be eclipsing its positive implications. “The time is coming to reconsider” the policy, he said