Nonetheless, notes Mr Cannon, similar optimism about the impact of the first rate rise after a long period of rock-bottom rates proved misplaced at Japanese banks in 2006. Loan demand remained sluggish, margins narrow and share prices listless. Even if banks manage to avoid the write-downs on assets that have come with rate rises in the past, they still face another problem: the possibility that the price of attracting deposits rises more quickly than the interest they can charge on loans.