BoJ keeps key rate unchanged, expands lending
Source: Agencies |
June 15, 2011, Wednesday
|
Print Edition
Print Edition
JAPAN'S central bank kept its key interest rate unchanged at virtually zero and expanded a lending program to bolster the disaster-hit economy.
The Bank of Japan's nine-member policy board voted unanimously yesterday to leave the overnight call rate target at zero to 0.1 percent. The decision, made at the two-day meeting, was widely expected.
"Regarding risks to the economic outlook, there is a high degree of uncertainty about the effects of the earthquake disaster on Japan's economy," the board said in its statement.
Japan's economy was hit hard by the March 11 earthquake and tsunami, which damaged factories, wiped out large swaths of the northeast coast and triggered the worst nuclear power accident in Japanese history. Manufacturers struggled with parts shortages, and consumer spending tumbled.
The impact sent the world's No. 3 economy back into recession in the January-March quarter, with gross domestic product contracting at an annualized rate of 3.5 percent.
In its latest attempt to aid the economy, the central bank decided to offer commercial banks 500 billion yen (US$6.2 billion) in new credit as part of a measure introduced last year to fuel economic growth.
The low-interest lending facility is designed to encourage private banks to lend money to businesses in growth sectors such as environment, energy, elderly care and tourism. Under the expansion announced yesterday, the facility now includes equity investments and loans to companies without conventional collateral like real estate.
A finance ministry survey released earlier in the day highlighted the extent of corporate pessimism in Japan. The sentiment index for large companies with at least 1 billion yen in capital fell to minus 22 in the April-June period, worsening from minus 1.1 three months earlier. It was the lowest level in two years.
The figure represents the percentage of companies saying business conditions are deteriorating from those saying conditions are improving.
The Bank of Japan's nine-member policy board voted unanimously yesterday to leave the overnight call rate target at zero to 0.1 percent. The decision, made at the two-day meeting, was widely expected.
"Regarding risks to the economic outlook, there is a high degree of uncertainty about the effects of the earthquake disaster on Japan's economy," the board said in its statement.
Japan's economy was hit hard by the March 11 earthquake and tsunami, which damaged factories, wiped out large swaths of the northeast coast and triggered the worst nuclear power accident in Japanese history. Manufacturers struggled with parts shortages, and consumer spending tumbled.
The impact sent the world's No. 3 economy back into recession in the January-March quarter, with gross domestic product contracting at an annualized rate of 3.5 percent.
In its latest attempt to aid the economy, the central bank decided to offer commercial banks 500 billion yen (US$6.2 billion) in new credit as part of a measure introduced last year to fuel economic growth.
The low-interest lending facility is designed to encourage private banks to lend money to businesses in growth sectors such as environment, energy, elderly care and tourism. Under the expansion announced yesterday, the facility now includes equity investments and loans to companies without conventional collateral like real estate.
A finance ministry survey released earlier in the day highlighted the extent of corporate pessimism in Japan. The sentiment index for large companies with at least 1 billion yen in capital fell to minus 22 in the April-June period, worsening from minus 1.1 three months earlier. It was the lowest level in two years.
The figure represents the percentage of companies saying business conditions are deteriorating from those saying conditions are improving.
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