The Bank of Japan’s Policy Board voted unanimously to hold overnight call rates at about 0.1% and announced measures to increase liquidity in Japanese markets.
The central bank pledged to increase its purchase of Japanese government bonds (JGBs) by ¥4.8 trillion a year (£35 billion), taking yearly purchases up from ¥16.8 trillion to ¥21.6 trillion. The measures will be effective from this month.
The purchasing of additional government bonds echoes one aspect of the quantitative easing steps announced by the Bank of England. The aim is to restore liquidity to credit markets by encouraging banks to start lending to give struggling corporates access to capital.
As part of these measures, the Bank of Japan also announced this week that it is exploring a framework for providing banks with subordinated loans.