Business News

Japan central bank to expand business loan programme

Mar 13, 2012, 8:08 GMT

Tokyo - The Bank of Japan said Tuesday that it would expand a loan programme for selected high-growth business sectors by 2 trillion yen (24.3 billion dollars) to 5.5 trillion yen in a bid to stimulate the economy.

The central bank will also extend the application period for new loans under the programme by two years to March 31, 2014, it said at the end of a two-day monetary policy meeting.

The bank said the programme would involve a new arrangement to make 1 trillion yen worth of loans and investments available denominated in US dollars.

The move was to 'support strengthening the foundations for economic growth,' the bank said.

The bank also decided to extend loans for reconstruction in disaster-hit areas by one year.

'Japan's economic activity has remained more or less flat, although it has shown some signs of picking up,' the bank said.

The bank decided to hold off further monetary easing, disappointing markets, which had expected another asset purchase drive.

Following the announcement, the benchmark Nikkei 225 Stock Average dropped in afternoon trading, almost erasing the morning's gains and closing up 0.09 per cent for the day.

The bank voted unanimously to hold its key interest rate at zero to 0.1 per cent as expected.

In February, the bank decided to expand an asset purchase programme to about 65 trillion yen from 55 trillion yen to help boost the economy amid the yen's rise and global economic problems.

The bank then set its price stability goal, aiming to stimulate a 1.0-per-cent increase in the consumer price index, to combat the country's persistent deflation.

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