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Japan unveils $6bn business boost, keeps rates on hold | Japan unveils $6bn business boost, keeps rates on hold |
(40 minutes later) | |
The Bank of Japan (BOJ) has unveiled a 500bn yen ($6.2bn; £3.8bn) credit line to help small businesses in the country. | The Bank of Japan (BOJ) has unveiled a 500bn yen ($6.2bn; £3.8bn) credit line to help small businesses in the country. |
The country's banks will able to use this facility to extend loans to smaller firms without using real estate as collateral. | The country's banks will able to use this facility to extend loans to smaller firms without using real estate as collateral. |
Japanese firms have been facing a tough time in wake of the destruction caused by the earthquake and tsunami. | Japanese firms have been facing a tough time in wake of the destruction caused by the earthquake and tsunami. |
The BOJ also kept interest rates unchanged, at between zero and 0.1% | The BOJ also kept interest rates unchanged, at between zero and 0.1% |
"The BOJ is also sending a message to the public that it is doing its part to enhance growth and beat deflation by boosting loans for growth sectors," said Masamichi Adachi of JP Morgan Securities. | |
Growth concerns | |
The destruction caused by the 11 March earthquake and tsunami in Japan saw many factories suspend or curb their production. | |
That resulted in many businesses forecasting a fall in profits or even incurring losses due to damage caused to their factories and subsequent loss of revenue. | |
While progress has been made in restoring the supply chain, analysts say that demand is not rising as fact as policy makers had expected. | |
On Monday, the cabinet office had reported that core machinery orders in Japan fell 3.3% in April, compared with the previous month. | |
"The truth is there are more reasons to be concerned about the outlook than to be optimistic," said Tetsu Aikawa of Shinsei Bank. | |
"Reconstruction demand isn't coming as soon as many people were expecting, which we saw in weak machinery orders data," he added. | |
However, the Bank of Japan has a different view. | |
It says the economy has started to recover despite all the difficulties. | |
"Japan's economy is under downward pressure, mainly on output, due to the quake's impact but showing some signs of picking up," the bank said. |
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