Japan central bank keeps zero-interest-rate policy

TOKYO — Japan's central bank kept interest rates at virtually zero Thursday and offered new details of a $61 billion asset purchase program intended to help revive a faltering economy. In a widely expected decision, the Bank of Japan's nine-member policy board voted unanimously to keep its key interest rate at zero to 0.1 percent following a one-day meeting. The central bank at its last meeting earlier this month tweaked the interest rate for the first time since December 2008. The meeting comes as Japan faces growing worries about its recovery, which is struggling in the face of a strong yen, persistent deflation and slowing global growth. Recent economic indicators point toward deteriorating exports — a key driver of Japan's economy — and slowing factory production. In response, Bank of Japan Gov. Masaaki Shirakawa announced a "comprehensive monetary easing policy" on Oct. 5 that consisted of the rate cut and a pledge to maintain the zero rate policy until prices start rising again. It also included the creation of a temporary 5 trillion yen ($61 billion) fund to purchase financial assets such as government securities, commercial paper and corporate bonds in an attempt to stimulate the economy by lowering longer-term interest rates and risk premiums. The central bank will offer another 30 trillion yen through its loan program. The Bank of Japan outlined details of the program Thursday. It will buy up to 3.5 trillion yen of Japanese government bonds and treasury discount bills. The rest will be used for commercial paper, corporate bonds, exchange-traded funds and Japan real estate investment trusts. Corporate bonds need at least a BBB rating, which is a lower level than the central bank has previously accepted. The central bank also moved up its next meeting from Nov. 15-16 to Nov. 4-5, a couple days after a Federal Reserve meeting. Markets expect the Fed to ease monetary policy through a plan to buy Treasurys. Investors have been anticipating the Fed would buy between $500 billion and $1 trillion in Treasurys to drive interest rates lower and encourage lending and spending. But a report in The Wall Street Journal said the Fed's bond purchases might amount instead to a few hundred billion dollars over several months, undershooting predictions. The report helped the dollar climb Wednesday versus the euro and Japanese currency. It was trading above the 81-yen line Thursday after falling into the 80-yen range earlier this week. — AP