The Bank of Japan (BOJ) yesterday (Tuesday) took steps to preserve a fragile economic recovery by pumping more short-term funds into the nation's banking system. However, many analysts are worried that the central bank didn't do enough to put a ceiling on the yen, and prop up its ailing corporate sector.
Japan's central bank said it would make available $115 billion (10 trillion yen) in three-year loans at 0.1% interest. The announcement was made after the BOJ held an extraordinary monetary policy meeting, which was called to "discuss monetary control matters based on recent economic and financial developments," namely the rise of the yen and growing deflation that poses a threat to its nascent economic recovery.
Japan's third-quarter gross domestic product (GDP) rose at a 4.8% annual rate, after revised growth of 2.7% in the second quarter. But the nation's currency, which last week hit a 14-year high against the dollar, is jeopardizing the recovery by making Japanese exports more expensive for other countries.