Japan’s central bank holds rates, raises purchase of government bonds

March 18th, 2009 - 12:11 pm ICT by IANS  

Tokyo, March 18 (DPA) Japan’s central bank Wednesday kept its benchmark interest rate unchanged at 0.1 percent but decided to step up its purchases of government debt.
The Bank of Japan is to increase its monthly purchases of long-term government debt from 1.4 trillion yen ($14.21 billion) to 1.8 trillion yen to inject liquidity into money markets and prevent the rise of long-term interest rates.

Its unanimous decision to keep its overnight lending rate unchanged was expected after it last lowered the rate in December by 20 basis points.

Because it has little room to manoeuvre because of its low interest rates, the Bank of Japan has turned to more unconventional measures to fight the recession that has hit the world’s second-largest economy.

The central bank said Tuesday that it was considering propping up commercial banks by making subordinate loans worth 1 trillion yen to the financial institutions to encourage them to supply businesses with loans.

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