The Bank of Japan decided Monday to further ease its monetary policy and to pump trillions of yen into short-term money markets to dispel concerns about the effect on the economy of Friday's devastating earthquake and tsunami.
The Bank of Japan decided Monday to further ease its monetary policy and to pump trillions of yen into short-term money markets to dispel concerns about the effect on the economy of Friday's devastating earthquake and tsunami.
The central bank decided at its monetary policy meeting Monday afternoon to add 5 trillion yen ($60.9 billion) to a BOJ fund for purchasing financial assets, bringing the total to 40 trillion yen.
The bank will also encourage the uncollateralized overnight call rate to remain at around 0 to 0.1 percent.
The bank said it "will provide ample funds sufficient to meet demand in financial markets and will do its utmost to ensure financial market stability."
Earlier in the morning, the central bank decided to pump a total of 21.8 trillion yen, the largest amount ever, into short-term money markets to help commercial banks and other financial institutions quickly secure funds.
A total of 15 trillion yen was offered on Monday, to be followed by 6.8 trillion yen more on or after Tuesday.
The BOJ's injection of funds was the first such operation in the short-term money market since May 2010, when the market was shaken by a fiscal crisis in Europe.
The scale of the operation will be far larger than the 4.5 trillion yen pumped in following the collapse of Lehman Brothers in fall 2008, which was the largest supply operation until now.
Financial institutions have already applied to borrow 10.04 trillion yen of the 15 trillion yen offered on Monday.