In a bid to facilitate the recovery from economic recession, the Bank of Japan would be offering loans worth 3 trillion yen ($33 billion) under a new credit program. The credit would be extended to Companies for as long as four years.
In another significant decision, the bank today decided not to change the benchmark interest rate of 0.1%, the cost at which new loans would be extended.
In a release issued in Tokyo today, the bank said loan requests would be accepted through March 2012.
The most critical challenge the Japanese economy is currently facing is to raise the potential economic growth rate and productivity, the central bank said. The latest move aims to act as a catalyst for financial institutions in making efforts toward strengthening the foundations of economic growth.
Notably, the steps came in the wake of increasing pressure on Governor Masaaki Shirakawa to do more for economic recovery. Newly appointed Prime Minister Naoto Kan, too, wants BOJ to play a greater role in the recovery.
Yasunari Ueno, the Chief Market Economist at Mizuho Securities Co. in Tokyo, said the new program is a tool to flag the BOJ’s cooperation to the government. “It’s also an attempt to prevent the bank’s monetary policy from being driven in an unfavorable direction”, he said.
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