Japanese stocks ups the way in world markets Monday after the country’s central bank eased monetary policy again in its latest attempt to shore up the economy. Prime Minister Naoto Kan said Japan is preparing a 920 billion yen ($10.8 billion) stimulus plan to boost employment and help small businesses threatened by the rising yen and prolonged deflation.
The latest moves from Bank of Japan come against the backdrop of appreciating yen that has dented the profitability of exporters. In an emergency meeting, the apex bank decided to provide additional funds worth 10 trillion yen, having a term of six months.
The yen climbed, reversing earlier declines, on concern the joint action is a continuation of policies that have failed to spur domestic demand and prevent 17 straight months of falling consumer prices.
The stimulus comes on top of three-month loans of 20 trillion yen that is already being extended by the bank. The new loan would be available at an interest rate of 0.1 per cent.
The new stimulus will extend incentive programs to buy energy-saving household appliances and include measures to help graduates find jobs, Kan’s administration said in a statement. It will also support small and mid-sized-companies struggling to cope with the yen’s gain to a 15-year high against the dollar and map out measures to help strengthen domestic investment.
The central bank’s decision is widely expected to be followed by the Japanese government announcing new stimulus measures to accelerate economic growth. This is the second time since December 2009 that Bank of Japan has come up with low-interest rate funds. Japan, which is grappling with fragile revival, has been surpassed by China as the world’s second largest economy.