Bank of Japan Gov. Masaaki Shirakawa may be forced to adopt more aggressive measures to ease the credit shortage bedeviling companies, economists say.
The BOJ may have to augment last week's decision to accept lower-grade corporate debt as collateral for loans to commercial banks by buying it from them outright. Banks shrugged off the BOJ's Dec. 2 attempt to increase liquidity, driving yields on commercial paper to a record high.
"The BOJ's latest steps for corporate financing turned out to be insufficient and failed to quench lenders' thirst for cash," said Junko Nishioka, an economist at RBS Securities Japan Ltd. "The (central) bank may come under pressure to buy commercial paper and even trim the key rate deeper."