Interest rates on new loans declined in June, BOJ says

Short-term and long-term rates on new loans by domestic banks fell by 0.016 and 0.14 percentage points in June from the previous month, the Bank of Japan said August 4.

The declines were caused by huge low-interest loans made to large companies, which needed funds to pay summer bonuses to employees, a BOJ official said. The long-term prime lending rate -- the rate charged on loans with maturities of one year or longer to the most creditworthy corporate borrowers -- was lowered by 0.2 percent to 2.9 percent in mid-June.

Short-term rates, 1.779 percent on average in June, dropped for the second month in a row. Long-term rates, whose average was 2.284 percent, declined for the first time since March. Lending rates are expected to show a leveling off in the July reports, the official said.