Mizuho to hike prime lending rate to 2.5%, 7-year high.
Mizuho Corporate Bank said Tuesday it will raise its long-term prime lending rate by 0.05 percentage point to 2.5 percent per annum, making it the highest level in about seven years.
The new rate, charged on loans of one year or longer to its most creditworthy corporate borrowers, will take effect Wednesday.
Mizuho's move, the fourth long-term rate raise in as many months, comes on the heels of a rising trend in market rates, which stems from anticipation that there will be more than one monetary-tightening action by the Bank of Japan by the end of this year.
Market rates began to climb even before the central bank decided in March to end its policy of pumping excess liquidity into the banking system.
Analysts expect the prime rate hike will have little impact on corporate borrowers, as banks actually offer lower rates than their prime rates in many cases to beat the competition.
Rates on housing loans tied to long-term prime rates are likely to be raised.
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|Publication:||Japan Weekly Monitor|
|Date:||May 15, 2006|
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