In the face of calls for the Bank of Japan to ease its monetary policy further, Gov. Masaru Hayami said Wednesday that is exactly what the central bank did when it lowered its official discount rate.
"In the sense that (the central bank) increased the channels through which funds will be supplied (to financial institutions), yes, this is a monetary easing," Hayami said during a regular news conference. Hayami was defending the central bank's decision Friday to lower its official discount rate by 0.15 percentage points to 0.35 percent as a means of securing stability in the financial system.
The discount rate is the rate at which the central bank lends funds to commercial banks. The central bank left its 0.25 percent target for the overnight call rate, the rate at which banks lend to each other, unchanged.
"In the event of something unexpected happening -- in the regional areas, also -- we have now the means by which to supply necessary funds (to financial institutions)," Hayami said. "I think the market will be able to face the end of the fiscal year with its mind at ease."
There is a greater risk of a halt or reversal to Japan's recovery due to the possibility of a further deceleration in overseas economies and volatility in the stock market, Hayami said.
But he denied that it is now time to return to the "zero-interest-rate" policy or for "quantitative easing," in which the central bank injects a larger volume of funds into the market in the hope of easing money.
"Recovery led by the private sector is continuing gradually, although its pace has slowed, due to a decrease in exports," Hayami said. "The situation does not call for experimental methods whose effects are uncertain."