Tokyo, March 18: The Bank of Japan (BoJ) will this week announce a return to the policy of keeping interest rates at zero in the `mid- to long-term' period, a press report said on Sunday. BoJ, which is widely expected to reverse its monetary policy during tomorrow's board meeting, is expected to spell out the long-term prospects of keeping interest rates at rock bottom, the Mainichi Shimbun reported.By showing its commitment to continuous monetary easing, the central bank hoped to illustrate its support for the reeling economy, the daily said.
The BoJ controversially abandoned the zero-rate policy last August, but has since come under fierce political pressure amid plunging share prices and Japan's gloomy economic performance. The ruling Liberal Democratic Party (LDP)'s policy chief Shizuka Kamei gave the latest kick in the back, forecasting that central bank would revert to the policy of guiding the overnight call rate to zero. "They should revive the zero interest rates, and the situation will move towards that direction", Kamei told a television program.
The Bank of Japan twice cut interest rates last month,followed by the government's monthly economic assessment on Friday last which belatedly acknowledged that Japan was mired in deflation.
(AFP)
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