Japan eases policy to boost economy

TOKYO – Japan’s central bank further eased monetary policy yesterday in response to a strong yen and growing political pressure to revive a faltering economy.

The move comes as Prime Minister Naoto Kan prepares a new set of economic stimulus measures, expected later yesterday after meeting with Bank of Japan Govornor Masaaki Shirakawa.The news lifted Japanese stocks and briefly boosted the dollar, which later slipped back near 15-year lows against the yen.To boost liquidity, the central bank unveiled a new six-month low-interest loan program to financial institutions. Combined with an existing three-month funds-supplying operation worth 20 trillion yen (US$236,4 billion), banks will now have access to a total of 30 trillion yen (US$355 billion).The decision by the central bank’s board came during an emergency meeting called by Shirakawa. The board voted unanimously to keep the bank’s key interest rate at a super-low 0,1 per cent.’With this, the bank will encourage a decline in market interest rates and further enhance easy monetary conditions,’ it said in a statement.Japan’s export-driven economy faces growing uncertainty due to the strong yen and slowing global growth. Sustained strength in the yen is toxic to vital exporters such as Toyota Motor Corp and Sony Corp because it erodes their international profits and makes their goods less competitive abroad.Japan’s economy lost its place to China as the world’s second-largest after posting annualised growth of just 0,4 per cent in the second quarter.Initial indications about the stimulus package’s contents were disappointing.The business daily Nikkei reported in its evening edition that measures included extending low interest rates for home buyers and increasing the number of job counselors for high school and college graduates.The Nikkei 225 stock average advanced 1,8 per cent to close at 9 149,26. The dollar gave up earlier gains to fall to 84,96 yen from 85,21 yen late Friday.The central bank cited mounting worries about the US economy and volatility in foreign exchange and stock markets for its latest steps.’The bank believes that the monetary easing measure, together with the government’s efforts, will be effective in further ensuring Japan’s economy recovery,’ it said. Economists, who predicted the central bank’s decision, say there may be more to come.’If the economic outlook and market conditions get worse, the BOJ will likely announce some additional easing measures,’ said Masaaki Kanno, chief economist at JPMorgan Securities Japan, in a note to clients. – Nampa-AP

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