(MENAFN - Kuwait News Agency (KUNA)) Japan's central bank on Thursday decided to introduce a JPY 1 trillion (USD 11.73 billion) low-interest loan program for financial institutions in areas affected by the March 11 earthquake and tsunami and the subsequent nuclear emergency.
The Bank of Japan (BOJ) judged "it necessary to introduce a funds-supplying operation that provides financial institutions in disaster areas with longer-term funds in order to support their initial response efforts to meet the future demand for funds for restoration and rebuilding," it said in a statement after a two-day policy meeting through Thursday.
Under the lending program, the BOJ will provide loans for a year at 0.1 percent interest, matching the upper range of the benchmark rate, for financial institutions operating in the disaster areas.
At the meeting, BOJ Governor Masaaki Shirakawa and his eight board colleagues also voted unanimously to keep the unsecured overnight call loan rate on hold at 0.0-0.1 percent.
The central bank also downgraded its assessment of the world's third-biggest economy, saying, "Japan's economy is under strong downward pressure, mainly on the production side, due to the effects of the earthquake disaster." The earthquake has sharply dampened production in some areas by damaging production facilities, disrupting the supply chain, and constraining electric power supply, the BOJ said in the statement.
According to the BOJ's baseline scenario, Japan's economy is "expected to return to a moderate recovery path, as supply-side constraints are mitigated and production regains traction, economic conditions and by a rise in demand for restoring capital stock." Speaking at a press conference after the meeting, Shirakawa said, "Japan's economy will resume a moderate recovery once supply constraints are resolved and export increases."