TOKYO: The Bank of Japan on Thursday unveiled new measures to help soothe an economy reeling from the nation's biggest recorded earthquake, a tsunami and the world's worst nuclear crisis for 25 years. The central bank warned that the economy faced "strong downward pressure" due to the impact of the March 11 disasters on production and supply chains, and unveiled a lending scheme to help banks in quake-hit areas. It left its key rate unchanged at between zero and 0.1 percent and downgraded its view of the economy due to the disasters, which have plunged the nation into its worst crisis since World War II.
"Japan's economy is under strong downward pressure, mainly on the production side, due to the effects of the earthquake disaster," the central bank said.
"The earthquake has sharply dampened production in some areas by damaging production facilities, disrupting the supply chain, and constraining electric power supply." The 1.0 trillion yen ($11.7 billion) lending programme offers cheap one-year loans to ensure that financial institutions in disaster-hit areas can meet demand for post-quake reconstruction funding, the bank said in a statement. The bank injected a record amount of cash into the banking system after the quake and doubled its asset purchase fund to 10 trillion yen. The total cost from collapsed or damaged houses, factories and infrastructure such as roads and bridges is estimated at 16-25 trillion yen over the next three fiscal years, according to the Cabinet Office. The estimate does not account for wider issues such as how radiation from the stricken Fukushima nuclear plant will affect food and water supply, amid an ongoing food scare.
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