The Bank of Japan is determined to continue supplying funds to markets toward the end of the year to bring short-term interest rates to an appropriate level, BOJ Gov. Yasuo Matsushita said Friday.
Matsushita said short-term interest rates, especially those for one-month loans needed to meet yearend demand, have remained relatively high partly due to faltering overseas confidence in Japanese financial institutions.
Japanese banks are being charged extra interest on top of normal lending interest in overseas markets. Matsushita acknowledged the interbank money market has been tightening since late November following the failures of a number of major financial institutions, including Hokkaido Takushoku Bank and Yamaichi Securities Co. But the BOJ's continuous supply of funds to the market has helped overnight loan rates to stabilize, he added.