By BridgeNews
Tokyo--Feb. 9--The Bank of Japan (BOJ) policy board voted by majority Friday to cut the official discount rate to 0.35% from 0.50% for the first time since September 1995. But BOJ board members decided to leave the unsecured overnight call loan target unchanged at 0.25% by majority vote, the BOJ said in a statement after the meeting. In addition, the BOJ announced several ways to improve liquidity provision.
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With these steps mentioned above, BOJ will support the ongoing economic recovery, the central bank said. BOJ also said these steps will confirm smooth functioning and stability of financial markets.
BOJ said liquidity provision steps will include the following measures:
--Introduction of a "Lombard-type" lending facility in order to stabilize "market rates through lending at the official discount rate." --Increases in outright purchases of treasury bills (TBs) and financing bills (FBs) in order to supply short-term funds "without putting repayment pressure."
--Improvement of bill purchasing operations in order to supply short-term funds to wider range of financial institutions, such as regional ones, by using all BOJ branches nationwide.
BOJ also said BOJ governor Masaru Hayami will meet the press from 1830 JT today on the discount rate cut.
The number of members who opposed the decision and the reasons why will be disclosed in the minutes to be released at 1400 JT March 23. Today's meeting started around 0900 JT and ended at 1713 JT. The next Monetary Policy Meeting will be held Feb. 28.
The policy board is expected to have analyzed the potential adverse effects on Japan's economy of the weak Nikkei stock index and the U.S. economic slowdown. Members appear to have voiced concern over the outlook for the economy due to those two factors.
The BOJ ended its zero-interest-rate policy on Aug. 11 by hiking the key policy indicator--the overnight call loan rate--by 25 basis points. But the central bank left the discount rate unchanged at 0.50% then. The BOJ will offer its latest economic assessment at 1400 JT Tuesday through its monthly economic and financial report.
The BOJ slightly downgraded its economic assessment for December and January as a result of the U.S. slowdown and volatile financial markets here and overseas.
BOJ Governor Masaru Hayami will meet the press at 1600 JT Wednesday. BOJ policy board member Teizo Taya will deliver a speech and meet the press Feb. 22 in Utsunomiya. End Copyright 2001 Bridge Information Systems Inc. All rights reserved.