The Bank of Japan said it will offer ¥1 trillion ($12 billion) in one-year loans to alleviate cash shortages in the wake of the nation’s record earthquake.
The central bank made the announcement after a policy meeting in Tokyo today. Governor Masaaki Shirakawa and his board also held the benchmark interest rate at a range of zero to 0.1 per cent. Officials kept a separate credit program unchanged at ¥30 trillion and an asset-purchase fund at ¥10 trillion, the bank said in a statement.
The Bank of Japan unveiled a lending program to help companies in areas affected by the nation’s record earthquake, while voicing concern the disaster may depress economic growth in coming months.
Governor Masaaki Shirakawa’s efforts to restore stability to the world’s third-largest economy since the March 11 temblor have focused on pumping record one-day credit into money markets and adding ¥5 trillion to its asset-purchase program. Even together with today’s targeted lending facility, the efforts are less than a tenth of the US Federal Reserve $600 billion easing program.
“Banks already have enough cash and don’t really need liquidity,” said Hiroshi Miyazaki, chief economist at Shinkin Asset Management Co in Tokyo. “What Japan needs from the BOJ is monetary easing that’s beyond the ordinary.” The yen traded at 85.27 per dollar as of 5:10 pm in Tokyo. It has weakened more than 5 per cent since Group of Seven authorities sold the currency on March 18 to stem its advance.