The Bank of Japan’s Policy Board on Thursday decided to maintain its easy monetary policy, the central bank said.
The decision was made in a majority vote during the board’s policymaking meeting.
The decision against the policy change was widely expected following the board’s credit-easing step taken after the Monetary Policy Meeting on Sept. 9. It was the first such move by the central bank in three years.
At the Sept. 9 meeting, the board lowered the unsecured overnight call money rate down to around 0.25 percent. The rate is applied to financial institutions when they try to obtain funds from money markets for their daily operations.
The decision to further slash the key short-term interest rate showed the central bank’s willingness to aid the economy. Until then, the call money rate was, on average, slightly below the 0.5 percent official discount rate, and the policy board had questioned the efficacy of monetary measures in spurring the economy.
At the Sep. 9 meeting, however, the policy board left the official discount rate untouched; it has been maintained at an unprecedented low of 0.5 percent since September 1995.
The policy board is believed to have discussed effects of the Sept. 9 easing at the latest meeting, minutes of which are due to be released Nov. 2. With signs of a further economic downturn growing, the BOJ policymakers have likely considered taking additional measures, such as cutting the reserve requirement ratio for commercial banks.
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