ID :
22549
Sat, 10/04/2008 - 08:20
Auther :
Shortlink :
https://oananews.org//node/22549
The shortlink copeid
Economic minister backs BOJ policy of not cutting interest rates
TOKYO, Oct. 3 Kyodo - The Bank of Japan's pumping of ample liquidity into the financial system is the ''right'' decision amid credit turmoil, a senior Cabinet minister said Friday, supporting the view that the central bank does not necessarily need to cut interest rates.
Economic and Fiscal Policy Minister Kaoru Yosano's remarks came as the U.S.
financial crisis has spread to the global economy with observers expecting
major central banks, including the BOJ, to be under pressure to lower lending
rates in a coordinated action.
Yosano said he welcomes the BOJ's liquidity policy, describing it as being
''right and effective.''
Asked whether the government thinks the BOJ should cut interest rates to quell
the stress in money markets, the minister said, ''The target of the key
short-term rate is already at 0.5 percent. Besides, in some other countries,
interbank (overnight call) rates have shot up...so lowering the target rate
would not be effective.''
Yosano stands out as one of the lawmakers in the ruling Liberal Democratic
Party who make it a principle to respect the independence of the BOJ in making
monetary policy even as some of his colleagues implicitly or explicitly
pressure the bank to cut interest rates to boost Japan's economy.
The bank will start its two-day policy meeting Monday and is widely expected to
leave the key rate unchanged at 0.5 percent for the 20th month running.
BOJ Governor Masaaki Shirakawa has said the bank rejects any bias in setting
interest rates, stressing that it carefully considers upside risks to inflation
as well as downside risks to growth.
On Friday, the BOJ pumped 800 billion yen into the Tokyo money market in a
further effort to facilitate interbank borrowing particularly by foreign
financial institutions.
The latest liquidity injection marks the bank's 13th straight business day of
emergency operations to curb tension in the market where the cost for banks to
borrow overnight funds from each other has risen above the BOJ's target rate as
many banks have become cautious about extending fresh loans out of fear of
defaults.
The BOJ has also joined a scheme with other central banks to unleash dollar
liquidity in a bid to thaw out frozen global credit markets. The operation is
the first of its kind for the Japanese central bank.
Earlier this week, the U.S. Federal Reserve doubled the amount of dollars it
lends to the BOJ, the European Central Bank and other central banks to lend on
to their local banks to $620 billion, aiming to help them fund their dollar
assets.
==Kyodo
Economic and Fiscal Policy Minister Kaoru Yosano's remarks came as the U.S.
financial crisis has spread to the global economy with observers expecting
major central banks, including the BOJ, to be under pressure to lower lending
rates in a coordinated action.
Yosano said he welcomes the BOJ's liquidity policy, describing it as being
''right and effective.''
Asked whether the government thinks the BOJ should cut interest rates to quell
the stress in money markets, the minister said, ''The target of the key
short-term rate is already at 0.5 percent. Besides, in some other countries,
interbank (overnight call) rates have shot up...so lowering the target rate
would not be effective.''
Yosano stands out as one of the lawmakers in the ruling Liberal Democratic
Party who make it a principle to respect the independence of the BOJ in making
monetary policy even as some of his colleagues implicitly or explicitly
pressure the bank to cut interest rates to boost Japan's economy.
The bank will start its two-day policy meeting Monday and is widely expected to
leave the key rate unchanged at 0.5 percent for the 20th month running.
BOJ Governor Masaaki Shirakawa has said the bank rejects any bias in setting
interest rates, stressing that it carefully considers upside risks to inflation
as well as downside risks to growth.
On Friday, the BOJ pumped 800 billion yen into the Tokyo money market in a
further effort to facilitate interbank borrowing particularly by foreign
financial institutions.
The latest liquidity injection marks the bank's 13th straight business day of
emergency operations to curb tension in the market where the cost for banks to
borrow overnight funds from each other has risen above the BOJ's target rate as
many banks have become cautious about extending fresh loans out of fear of
defaults.
The BOJ has also joined a scheme with other central banks to unleash dollar
liquidity in a bid to thaw out frozen global credit markets. The operation is
the first of its kind for the Japanese central bank.
Earlier this week, the U.S. Federal Reserve doubled the amount of dollars it
lends to the BOJ, the European Central Bank and other central banks to lend on
to their local banks to $620 billion, aiming to help them fund their dollar
assets.
==Kyodo
