Japan's economy under downward pressure
Japan's economy is "under strong downward pressure" due to the
devastation caused by the earthquake and tsunami, the Bank of Japan
The bank said that the downward pressure largely stems from lost
production and disrupted supply chains.
The central bank kept its monetary policy unchanged leaving the
interest rates in the range of zero to 0.1%. BOJ said it will offer 1
trillion yen ($11.7bn; $7bn) in new one-year loans.
The loans will be extended to financial institutions in the quake-hit
areas at an interest rate of just 0.1%.
Analysts say that given the current situation, the central bank is
unlikely to alter its monetary policy for the time being.
"The BOJ sees no need to ease policy further and will stand pat for
the time being, unless the nuclear crisis worsens significantly or
production struggles to recover in the coming months," said Masamichi
Adachi of JP Morgan Securities in Tokyo.
However, Adachi warned that as the full extent of damage caused by
the quake and tsunami becomes clear, the bank is likely to issue a
further warning of its impact on economic growth.
"The BOJ will cut its economic forecasts for the current fiscal year
but may raise its estimates for the next fiscal year in its economic
outlook report later this month," he said.
"Such an outcome would not warrant a change in monetary policy, at
least for now," he added. AFP