Japan's biggest lenders are urging the central bank to extend a low-interest loan program as soon as today, as a report showed the economy grew at half the forecast pace in the fourth quarter.
The 5.5-trillion yen ($54 billion) facility established in 2010 provides banks with funds at an interest rate of 0.1 percent. Funding costs for the nation's lenders averaged 0.97 percent in the six months ended September, according to the latest data by the Japanese Bankers Association. The three-month euro-yen Tokyo interbank offered rate, the price at which banks in the country's capital are willing to lend to each other, held at about 0.22 percent in the past four months.
Takeshi Kunibe, who chairs the lobby for Japan's largest banks, said last week that the BOJ's loan program is an "effective tool" for securing an economic recovery and called on the central bank to keep it alive after its expiry in March. Disappointing growth data and a sales tax increase due in April are adding to pressure on Governor Haruhiko Kuroda to safeguard the rebound as his board concludes a two-day meeting today.
Source: Bloomberg
