Sponsored Links
Tuesday, the Bank of Japan decided to introduce fund-supplying measures in an emergency meeting amid recent appreciation of the yen and falling consumer prices. Also, the central bank retained the key rate at near zero.
The Policy Board of the central bank, led by Governor Masaaki Shirakawa, unanimously decided to introduce a new funds-supplying operation to encourage a further decrease in longer-term interest rates. Accordingly, it would provide funds to commercial banks at a low and fixed interest rate of 0.1% for three months. As collateral, the central bank will accept Japanese government securities, corporate bonds, commercial papers, and loans on deeds. For the new operation, the BoJ set aside 10 trillion yen.
"The Bank has judged that, in supporting the economic recovery from the financial side, it is most effective at present to further spread the strong effects of monetary easing and encourage a further decline in longer-term interest rates in the money market through provision of ample longer-term funds at an extremely low interest rate," BoJ said in a statement.
Also, the central bank left its uncollateralized overnight call rate unchanged at 0.1%. The last change in the rate was a 0.1% cut in interest rates in December 2008.
The BoJ reiterated that it will continue to do its utmost as central bank to overcome deflation and return to a sustainable growth path with price stability. The government measures along with the central bank move will firmly support Japanese economic developments towards recovery.
The Japanese economy is picking up, but there is not sufficient momentum to support self-sustaining recovery in business fixed investment and private consumption, the BoJ noted today. Looking forward, the central bank said the pace of economic improvement is likely to remain moderate until around the middle of fiscal 2010.
Regarding consumer prices, the BoJ assessed that downward pressures on prices are set to remain even after the annual decline in the CPI, excluding fresh food, becomes fairly moderate toward the beginning of next year. However, the central bank finds risk of recent international financial developments and foreign exchange market instability posing adverse effects on economic activity.
On November 20, the Hatoyama government had declared that the economy is in deflation, the first official announcement of deflation since mid-2006. Core consumer prices, which excludes fresh food from the price basket, dropped 2.2% in October from a year earlier.
Yesterday, Chief Cabinet Secretary Hirofumi Hirano said Shirakawa and Prime Minister Yukio Hatoyama will soon discuss the measures to support the economy, including quantitative easing. Shirakawa is set to hold a news conference later today.
On Monday, Deputy Prime Minister Naoto Kan said the government will extend its extra budget for the fiscal year to 2.7 trillion yen. Finance Minister Hirohisa Fujii also indicated the possibility of more allocation than initially planned.
0 komentar:
Post a Comment