Bank of Japan chops rates
(6 October 2010 – Japan) Japan’s rulers of monetary policy have vowed to keep the nation’s benchmark interest rate a ‘virtually zero’ to combat deflation and to bolster its balance sheet, amid a slowing economic recovery.
The Bank of Japan (BOJ) has lowered the country’s benchmark interest rate from the previous 0.1 percent target to a range of zero percent to 0.1 percent.
The bank also pledged to create a ¥5 trillion (A$62 billion) fund to buy government bonds and other assets.
Governor Masaaki Shirakawa labelled the move 'comprehensive monetary easing' following a slump in the outlook for economic growth in the BOJ's quarterly Tankan survey last week.
American and British central bankers are also debating expansions of their balance sheets as developed nations struggle to sustain rebounds from the deepest postwar recession.
The Japanese economy is becoming fragile and warrants drastic monetary easing measures by the central bank, Seiji Shiraishi, chief economist at HSBC Securities, said before the BOJ announcement.
The bank’s move widens the governing body’s arsenal of tools beyond the ¥30 trillion credit program, which extends funds to banks at the 0.1 per cent benchmark rate. That facility had failed to halt a contraction in credit.
The bank also pledged to create a ¥5 trillion (A$62 billion) fund to buy government bonds and other assets.
Governor Masaaki Shirakawa labelled the move 'comprehensive monetary easing' following a slump in the outlook for economic growth in the BOJ's quarterly Tankan survey last week.
American and British central bankers are also debating expansions of their balance sheets as developed nations struggle to sustain rebounds from the deepest postwar recession.
The Japanese economy is becoming fragile and warrants drastic monetary easing measures by the central bank, Seiji Shiraishi, chief economist at HSBC Securities, said before the BOJ announcement.
The bank’s move widens the governing body’s arsenal of tools beyond the ¥30 trillion credit program, which extends funds to banks at the 0.1 per cent benchmark rate. That facility had failed to halt a contraction in credit.
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