Bank of Japan board member Koji Ishida warned that negative interest rate policy only gives a little effect to boost investment. Meanwhile, a continuing tumult in the market will hurt Japanese economy.

In his speech to business leaders meeting in Fukuoka, Japan, he said that continuing global market turbulence would hurt Japan's economy by damaging household and corporate sentiment. Nevertheless, the drastic plunge of energy and oil price will be beneficial for Japan and other importers.

He also said low oil price will not lead to recession, and concern about continuing plunge in oil will trigger recession is exaggerating. As quoted by Nikkei Asian Review, he said, "We've seen several cases in the past where a spike in oil prices pushed the global economy into recession. But we've never seen slumping oil prices trigger recession."

He also pointed out the unique labor market system in Japan as an impediment to prime minister's policy to drive companies raising wages. As rigid labow laws in Japan hindered companies to layoff their permanent employees.

Japanese companies tend to hire new graduates and offering beneficial treatment to retain them. As a result, employees choose to stay loyal in the company rather than switching jobs to seek higher pay. That limits the Japanese job mobility.

Ishida, the former president of Sumitomo Mitsui Banking Corp, said, "We must change the job market framework so that there is a smooth transition of labour, via wages, to highly-productive companies from low-productivity companies." He also admitted that such transformation will take time.

After the meeting he said to reporters, as Reuters reported, regarding negative interest policy, "Private-sector interest rates are already very low, so the policy won't necessarily lead to increases in capital expenditure."

Ishida was one of the four of nine-member board who voted against the BOJ decision to implement negative interest rate last month. He stated that a negative interest rate would have a little positive effect to the economy, because borrowing cost were already very low.

"The main business model of banks is to lend ... Any policy aimed at keeping interest rates low would hurt bank profits," he said. A negative interest rate may also affect the investment, as investor will be waiting to see its impact to the economy.

A strategist at Sumitomo Mitsui Asset Management Masahiro Ichikawa told New York Times that investors are looking forward to see the effect of BOJ stimulus program of adopting negative interest rate. "It's conceivable that they will push the policy rate even further into negative territory or take some other easing steps," he said.

Former president of Sumitomo Bank, Koji Ishida who is also the board member of BOJ has warned that negative interest rate policy only gives little effect to boost investment. Since investors are waiting to see the effect of BOJ stimulus program to economy.