Asia Times: BOJ: Short-term interest rates can sink further



	February 19, 1999	atimes.com

Japan Economy

BOJ: Short-term interest rates can sink further

TOKYO - Bank of Japan Governor Masaru Hayami said Tuesday the central bank will allow short-term interest rates to sink further, to a near-zero level, to implement the easy monetary policy adopted at its Feb. 12 board meeting.

''The BOJ will allow the unsecured overnight call rate to fall even as low as zero,'' he said, suggesting the central bank will guide the key short-term rate to near zero if investment trusts and other fund suppliers keep offering cash on the money market.

On the decline of the overnight call rate to about 0.1 percent, Hayami said the fall was ''faster than expected and quite a fine thing''.

''The main point of BOJ policy is to see the overnight rate move as low as possible,'' he added, stressing the central bank's priority on pushing the rate below 0.15 percent from 0.25 percent.

Hayami welcomed the lower yield on the benchmark No. 203 10-year government bond - below 2.0 percent on Tuesday - and the dollar's appreciation to 117 yen, calling these trends ''good for revitalizing the domestic economy."

Bond prices rebounded Tuesday as the Finance Ministry's fund trust bureau decided to resume outright buying of government bonds.

However, the central bank's purchases of government bonds with no ceiling would ''destroy financial discipline,'' Hayami declared, reiterating the BOJ stance adopted Feb. 12 that it would not change its pace of government bond buying in either frequency or value.

(Asia Pulse/Nikkei)

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©1999 Asia Times Online Co., Ltd.