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Japan''s central bank keeps super-low rate, loan programs for disaster-hit.

Japan's central bank decided on Friday to leave its

key interest rate unchanged at a range of zero percent to 0.1 percent and to

extend by six months its emergency loan program for disaster-hit regions.

At the end of a two-day policy meeting, Bank of Japan's (BOJ) Governor

Masaaki Shirakawa and his eight board colleagues voted unanimously to keep the

unsecured overnight call loan rate on hold, a level unchanged since October

last year. The BOJ committed to "continuing the virtually zero interest rate

policy until it judges that price stability is in sight," the central bank

said in a statement after the meeting.

The BOJ also decided to extend until the end of April 2012 its JPY 1

trillion (USD 13.1 billion) low-interest loan program for financial

institutions in areas affected by the March 11 earthquake and tsunami and the

subsequent nuclear emergency. As of the end of September JPY 448.9 billion

(USD 5.9 billion) had been provided.

But the central bank refrained from additional monetary easing measures

despite the recent rise of the yen against the dollar and euro. A strong yen

will worsen export profitability and affect earnings for exporters, as it

makes Japanese products more expensive overseas.

The BOJ also raised its assessment for September, saying, "Japan's economic

activity has continued picking up." It also said production and exports have

continued to increase, although their paces have moderated.

The BOJ said the world's third-biggest economy is expected to "return to a

moderate recovery path, backed by a moderate increasing trend in exports and

by a rise in domestic demand for restoring capital stock." However, it pointed

out risks to the economic outlook, such as the US economy and the possible

consequences of the sovereign debt problems in Europe.

Speaking to the reporters after the meeting, BOJ Gov. Shirakawa said the

central bank will pay a close attention to the negative impact on the Japanese

economy from a strong yen and the European sovereign debt problems. "I'm

concern that the yen's surge would lead Japanese companies to move their

production facilities abroad," said Shirakawa.

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Publication:Kuwait News Agency (KUNA)
Geographic Code:9JAPA
Date:Oct 7, 2011
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