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Japan: BOJ Decides to Ease Monetary Grip Further
Source: breitbart.com
Source Date: Monday, August 30, 2010
Country: Japan
Created: Sep 06, 2010

TOKYO, Aug. 30 (AP) - (Kyodo) The Bank of Japan decided at an emergency policy meeting Monday to ease its monetary grip further by expanding its low interest-rate funding program amid heightening concern that the yen's recent steep appreciation could derail the recovery of Japan's export-oriented economy.

In the face of the yen's recent sharp appreciation and sagging share prices, the Japanese central bank held the extraordinary policy meeting ahead of the scheduled Sept. 6-7 policy meeting and decided to keep its key interest rate on hold at a razor-thin 0.1 percent.

While announcing the policy decisions, the BOJ warned about future economic prospects, saying in a statement, "Uncertainty about the future, especially for the U.S. economy, has heightened more than before, and the foreign exchange and stock markets have recently been unstable."

"In these circumstances, the bank judged it necessary to pay more attention to the downside risks to the outlook for Japan's economic activity and prices," the BOJ said.

In a move to make more funds available to financial institutions, the BOJ will expand its lending program by launching a new 10 trillion yen, six-month facility. As a result, the total loan size will increase to 30 trillion yen from the current 20 trillion yen.

The BOJ's decision comes as the government prepares to compile the framework of a package of additional economy-spurring measures later in the day, amid a chorus of calls from business leaders for the government to take immediate action to ease the adverse impact on corporate earnings from the strong yen, which hit a 15-year high last week. A strong yen erodes Japanese exporters' overseas profits when repatriated and can hurt the export-reliant economy.

Prime Minister Naoto Kan said earlier in the day he will hold talks with Shirakawa in the afternoon. The two are expected to compare notes on recent economic developments, including Japan's slowing growth and the sharp rise of the yen against the U.S. dollar and other major currencies.
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