Central Bank of Japan limits the interest rates to close to zero

The key interest rate of the central bank at Japan has still been grounded to a figure close to zero. On Friday spokespersons from the bank said that they will soon start buying government bonds.

As a matter of fact the process of buying these bonds is scheduled to come into action from next week. This is included under a plan that they had revealed to the media previously in order to speed up the rates of recovery from their current economic dilemma.

The nine-member policy board of the Bank of Japan took the decision in one of their recent meetings. The decision was unanimous.

And overnight they had vowed to keep the bank’s interest rate to as low as zero to zero decimal one percent for a while now.

The central bank at Japan pulled up the interest rates only last month. They did this for the first time ever since the plunge in December 2008.

Many economists have been wondering what the reason is behind the economic dilemma being faced by the country. The bank of Japan has said that the slow U. S. economy is the greatest threat to them.

The slow U. S. economy rates are bringing down the speed of Japanese growth. This is rather surprising since the economic conditions of the developing nations have recently been gaining momentum.

In addition, Japan must also combat the surging yen. The surge in the value of the yen has a negative impact on their overseas trade. The falling value of yen erodes the value of their exports and overseas exchanges. It also brings down their total earnings overseas.

As a result Japan has decided to keep its rates of interest low. Since lower interest rates and various other ways of financial easing are regarded as essential in keeping the country’s currency rates lower or in the case of Japan stemmed at its strength.

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