Japan's central bank maintains razor-thin interest rate, offers cheap post-quake loans

08:37, April 08, 2011      

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The Bank of Japan (BOJ) on Thursday said it will maintain its key interest rate at a razor-thin zero to 0.1 percent in a bid to boost the nation's flagging economy, weighed on by the devastating affects of the March 11 earthquake and tsunami.

In addition, Japan's central bank announced that it will introduce a 1 trillion yen (about 11.7 billion U.S. dollars) emergency loan program to facilitate cheap loans to financial institutions in the regions affected by the disasters.

The one-year loans will be at a fixed interest rate of 0.1 percent and the central bank said it hopes the facility will spur financial institutions to proactively underwrite local restoration and reconstruction projects in the disaster-hit areas.

Japan's central bank highlighted that the economic outlook for Japan is becoming increasingly bleak following the March 11 disasters and as such the economy is under strong downward pressure.

"Japan's economy is under strong downward pressure, mainly on the production side, due to the effects of the earthquake disaster, " the BOJ said in a statement.

Data from the BOJ showed that since the March 11 quake and tsunami the central bank has injected more than 80 trillion yen into the financial system to help prevent the nation experiencing a Greece-like fiscal meltdown.

The bank also announced Thursday, following the conclusion of a two-day policy meeting, that it will maintain its asset purchasing program at 10 trillion yen.

The program covers cooperate bonds, government securities, exchange trade funds (ETFs) and real-estate investment trusts (REITs).

Source: Xinhua
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