Bank of Japan Gov. Masaru Hayami on April 13 ruled out a hike in the official discount rate in the immediate future, brushing aside suggestions from a senior Liberal Democratic Party lawmaker.
Speaking at a news conference, Hayami said the 16 trillion yen stimulus package announced Friday by Prime Minister Ryutaro Hashimoto is "very timely" and that "a sizable impact" on the economy is expected to help it recover.
Hayami also said he did not agree with the opinion of Hiromu Nonaka, the senior deputy LDP secretary general who in a speech Sunday called for a hike in the discount rate. The BOJ has kept the official discount rate at a record low 0.5 percent since September 1995, partly in an effort to bolster business activities by reducing borrowing costs. "It appears that interest rates must be kept at the current level" to help promote corporate investment and new business projects, Hayami said.
Some LDP lawmakers have cited the negative impact low interest rates are having on pensioners. Apparently with the 16 trillion yen package in mind, Nonaka said in his speech that he believes conditions are ripe for the BOJ to consider a change.
Hayami denied that the official discount rate could be lowered further, saying that the best the BOJ could do at present is try to keep the overnight call rate slightly below the official discount rate.