Tuesday, the Bank of Japan retained its key interest rate, but it decided to expand the range of eligible collateral in order to make funds easily available. Elsewhere, the World Bank lowered its growth forecast for developing East Asia and said a strong growth in China would pave the way for the region's recovery.
The Policy Board of Japan's central bank unanimously voted to hold the uncollateralized overnight call rate at 0.1%. The decision came in line with economists' expectations. The previous change in interest rates was a 20 basis point cut implemented in December 2008.
The central bank said it will accept loans on deeds to municipal governments as eligible collateral and also broadened the range of eligible collateral for loans on deeds to the government and those with government guarantees.
Despite improvements in issuing conditions for CP and corporate bonds, the BoJ noted that financial conditions remained tight. The BoJ's decision to expand the range of eligible collateral was made with an intention to ensure financial market stability.
The central bank resumed its purchase of stocks held by banks and is examining the specifics of providing subordinated loans to banks. Last month, the central bank raised its monthly government bond purchases.
The Washington-based World Bank forecast real GDP growth in developing East Asia to slow to 5.3% this year from 8% recorded in 2008. It was down from the bank's earlier forecast of 6.7% growth.
There is no doubt that the East Asia and Pacific region is confronting very difficult times, said Vikram Nehru, the World Bank's Chief Economist for the region. The countries that are able to tackle short-term challenges while staying focused on longer-term priorities will likely emerge better placed after the crisis to resume growth, he added.
A return to stronger economic expansion in China next year should help support growth among the countries of the East Asia and Pacific region, but a sustainable recovery will ultimately depend on developments in the advanced economies, the World Bank report said.
In other news, the Philippines consumer price annual inflation slowed to 6.4% in March from 7.3% recorded in February. It thus matched the level seen in the same month of the previous year. On a monthly basis, consumer prices inched up 0.1% after rising 0.5% in February. The core annual inflation, which excludes volatile items like food and energy, eased to 5.6% from February's 6.4%.
Taiwan's exports plunged 35.7% year-on-year in March to US$15.59 billion, the Finance Ministry said. The decline was close to analysts' expectations for a 35.3% fall and it was the seventh consecutive month of decline. Total imports amounted to US$12.17 billion, down 49.5% over the same month of last year, sharper than the expected 44.5% decline. Hence, there was a trade surplus of US$3.41 billion in March.
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