-Japan BOJ Hayami says large downside risk in economy
By Stephen Cannon, BridgeNews
Tokyo--Feb. 14--The Bank of Japan (BOJ) sees the tempo of economic recovery as having slowed and the economy has large downside risks, the central bank's Governor Masaru Hayami said Wednesday in parliament. However, Hayami added, "The Bank of Japan should support the private sector-led gradual recovery," indicating that despite added problems he believes the economy is improving.
* * * The government revised Japan's gross domestic product growth for the July-September quarter down from 0.2% to -0.6% last week.
"In line with these economic conditions, the Bank of Japan decided to keep an easy monetary policy with the overnight call rate at 0.25% last August. We decided that it's appropriate to positively evaluate the power supporting (the economy) on the monetary front," Hayami said, indicating that the overnight call rate is already sufficiently low.
The BOJ in August terminated the zero-interest-rate policy of keeping the overnight call rate near zero through open market operations when the BOJ raised it to 0.25%.
Hayami said that in addition to the current easy monetary policy, the BOJ has lowered the official discount rate from 0.5% to 0.35% and introduced the Lombard system to allow banks that experience time raising funds from the market to borrow at 0.35% from the central bank.
"We have prepared for the unexpected, the Bank of Japan will do everything in its power to continue to support the smooth function of the financial system and a stable financial structure. We will continue to cooperate to support the economic recovery from the monetary policy front," Hayami said.
Hayami is scheduled to appear in the Diet again from 1300-1430 and 1600-1630 JT. End Copyright 2001 Bridge Information Systems Inc. All rights reserved