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Wan LixinOpinion deputy editor of Shanghai Daily
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Japan's interest rate remains unchanged
By Tomoko A. Hosaka |
April 8, 2009, Wednesday
|
Print Edition
Print Edition
JAPAN'S central bank kept its benchmark interest rate steady yesterday but introduced new steps to spur lending and ease the strains of an increasingly painful recession.
The Bank of Japan's eight-member policy board voted unanimously to leave the key overnight call rate target unchanged at 0.1 percent, as widely expected.
With interest rates close to zero, the central bank has little room to tweak regular monetary policy and has instead focused on measures to boost corporate financing, which has shriveled amid the global credit crisis.
The central bank already buys commercial paper and corporate bonds to help shore up banks' balance sheets, but it acknowledged that "financial conditions have remained tight on the whole."
In its latest move, the BOJ expanded the range of collateral it accepts in an effort to funnel more funds to commercial banks and subsequently, to companies seeking loans.
The central bank said it now welcomes "loans on deeds to municipal governments as eligible collateral."
Japan's interest rates are among the lowest of major economies. The United States Federal Reserve's targeted range hovers between zero and 0.25 percent, while the European Central Bank last week trimmed its benchmark rate to 1.25 percent.
The world's second-largest economy is mired in its deepest recession since World War II, pummeled by a debilitating global slowdown that has sapped foreign sales of Japan's cars and gadgets.
Data for February released last week showed that industrial production tumbled, household spending fell sharply, and the country's unemployment rate rose to a three-year high. A quarterly central bank business survey showed that confidence among big manufacturers plunged to its lowest point ever.
The Bank of Japan's eight-member policy board voted unanimously to leave the key overnight call rate target unchanged at 0.1 percent, as widely expected.
With interest rates close to zero, the central bank has little room to tweak regular monetary policy and has instead focused on measures to boost corporate financing, which has shriveled amid the global credit crisis.
The central bank already buys commercial paper and corporate bonds to help shore up banks' balance sheets, but it acknowledged that "financial conditions have remained tight on the whole."
In its latest move, the BOJ expanded the range of collateral it accepts in an effort to funnel more funds to commercial banks and subsequently, to companies seeking loans.
The central bank said it now welcomes "loans on deeds to municipal governments as eligible collateral."
Japan's interest rates are among the lowest of major economies. The United States Federal Reserve's targeted range hovers between zero and 0.25 percent, while the European Central Bank last week trimmed its benchmark rate to 1.25 percent.
The world's second-largest economy is mired in its deepest recession since World War II, pummeled by a debilitating global slowdown that has sapped foreign sales of Japan's cars and gadgets.
Data for February released last week showed that industrial production tumbled, household spending fell sharply, and the country's unemployment rate rose to a three-year high. A quarterly central bank business survey showed that confidence among big manufacturers plunged to its lowest point ever.
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