MW; Bank of Japan holds off on easing, offers loans
Central bank also cuts economic assessment in view of quake
By Lisa Twaronite, MarketWatch
TOKYO (MarketWatch) — The Bank of Japan held off on easing its policy interest-rate range further Thursday, but it did establish a special lending facility for financial institutions in areas hit by the March 11 earthquake and tsunami.
The central bank said its policy board unanimously voted to keep its overnight call rate range from zero to 0.1%,
The BOJ said it plans to lend a total of 1 trillion yen (about $12 billion) in one-year loans at 0.1%, and also said it would broaden the range of eligible collateral for its money-market operations, “with a view to securing sufficient financing capacity of financial institutions in disaster areas.”
The central bank also downgraded its broad economic assessment after the disasters, saying in a statement that “Japan’s economy is under strong downward pressure, mainly on the production side.”
But it added that the economy is “expected to return to a moderate recovery path — as supply-side constraints are mitigated and production regains traction — backed by an increase in exports reflecting the improvement in overseas economic conditions.”
While financial markets have been “stable as a whole” following the disaster, “weakness has been observed in the financial positions of some firms, mainly small ones, since the earthquake.”
At its last meeting on March 14, the first business day after the disaster, the policy board voted 8-1 to expand the central bank’s asset-buying program by ¥5 trillion, to ¥40 trillion.
BOJ Gov. Masaaki Shirakawa was due to hold a news conference later Thursday.
