ヾ(゜Д゜)ノ"英字新聞

BOJ policy back in emergency mode
The global financial crisis and the fast-deteriorating domestic economy have put Japan's monetary policy back in emergency mode.
The Bank of Japan decided at its monetary policy meeting Friday to lower its key interest rate by 0.2 percentage point to 0.1 percent.
This is apparently the de facto resumption of the zero-interest-rate policy that the central bank adopted during the financial doldrums that followed the collapse of the bubble economy.
The central bank also announced what is effectively a quantitative-easing policy, including additional purchases of long-term Japanese government bonds and new measures to facilitate lending to companies.
The U.S. Federal Reserve Board on Tuesday introduced an effective zero-interest-rate policy and a quantitative-easing policy. The Bank of Japan responded quickly to the Fed's decision, even though it meant cutting the key interest rate for the second time in less than two months.
The Bank of Japan confirmed in its latest quarterly survey of business sentiment released Monday that the nation's economy is rapidly losing steam. At the same time, market pressure appreciating the yen's value against the dollar has been increasing since the Fed's decision pushed U.S. interest rates lower than those in Japan. The Bank of Japan's quick decision to take additional quantitative-easing measures makes sense.
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Deflation threat looms again
Meanwhile, the government on Friday downgraded its forecast of Japan's real economic growth rate for fiscal 2008 to minus 0.8 percent. The government aims to achieve zero growth in real gross domestic product in fiscal 2009, but in reality, the Japanese economy is likely to register negative growth in two straight years for the first time in 10 years.
Consumer prices, meanwhile, are expected to fall in fiscal 2009, rising fears of the return of deflation.
In addition to fiscal and tax measures to stimulate the economy, stabilizing the nation's financial markets by supplying ample liquidity is essential to stop deflation from taking hold.
The Bank of Japan decided this time to increase its purchases of long-term JGBs from financial institutions to 1.4 trillion yen a month from the current 1.2 trillion yen to secure sufficient liquidity.
In the quantitative-easing policy implemented for five years from 2001, the central bank accumulated funds up to a little over 30 trillion yen in its current account to calm anxieties in financial markets. However, the policy is said to have had only limited effects because most of the funds remained in financial institutions and did not facilitate corporate financing.
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Companies short of cash
Since it has become difficult to raise operating capital with commercial paper and corporate bonds under the current financial crisis, even major corporations are experiencing cash-flow problems.
To ameliorate this situation, the Bank of Japan announced a new method of purchasing CP under which it will buy the short-term corporate debt outright to facilitate corporate financing. It also will study the possibility of widening the range of securities it purchases.
It is extremely unusual for the central bank to assume the risk of its debt assets becoming unrecoverable due to corporate bankruptcies and other contingencies. This shows the central bank's strong determination to normalize the financial system.
We hope the Bank of Japan will improve the effectiveness of its easy-money policy by every possible means, while taking care not to compromise its financial strength.