Bank of Japan unveils new steps to bolster economy

The Japanese central bank on Monday unveiled new measures, entailing short-term loans worth 10 trillion yen (about $ 118 billion) to domestic financial entities, to boost sagging economic recovery.

The latest moves from Bank of Japan come against the backdrop of appreciating yen that has dented the profitability of exporters. In an emergency meeting, the apex bank decided to provide additional funds worth 10 trillion yen, having a term of six months.

The stimulus comes on top of three-month loans of 20 trillion yen that is already being extended by the bank. The new loan would be available at an interest rate of 0.1 per cent.

The central bank's decision is widely expected to be followed by the Japanese government announcing new stimulus measures to accelerate economic growth.

This is the second time since December 2009 that Bank of Japan has come up with low-interest rate funds.

Japan, which is grappling with fragile revival, has been surpassed by China as the world's second largest economy.

Recent data showed that Japan's GDP grew just 0.4 per cent and was valued at $1.29 trillion in the 2010 second quarter.

During the same period, the China recorded an expansion of 10.3 per cent which pushed the economy's value to $1.34 trillion.

Many of the developed economies including the US are seeing a significant slowdown in economic recovery.

Last week, Federal Reserve Chairman Ben Bernanke said that central bank is prepared to take unconventional steps if the American economy slides more than expected.