RPT-BOJ holds fire on policy, sets loan scheme for quake-hit banks

(Repeats to cover separate alerts series)

TOKYO, April 7 (Reuters) – The Bank of Japan kept monetary
policy steady on Thursday and launched a new loan scheme for
banks in the northeast region hit hard by last month’s
devastating earthquake and tsunami.

The central bank also cut its economic assessment and warned
of heightening uncertainty in the outlook, signalling its
readiness to ease policy further as a nuclear safety crisis and
rolling power blackouts hit output and business sentiment.

“Japan’s economy is under strong downward pressure, mainly
on production, due to the earthquake,” the BOJ said in a
statement after a rate review.

As widely expected, the BOJ kept interest rates unchanged at
a range of zero to 0.1 percent by a unanimous vote and held off
on loosening policy further.

Under the new loan scheme, the BOJ will offer a total of 1
trillion yen ($11.7 billion) in one-year loans at 0.1 percent
interest to financial institutions in the quake-hit northeast,
the central bank said.

BOJ Governor Masaaki Shirakawa will hold a news conference
later, with his comments to come out sometime after 4:15 p.m.
(0715 GMT).

Japan is facing its worst crisis since World War Two after
the 9.0 magnitude earthquake and a huge tsunami battered its
northeast coast, rocking the world’s third-largest economy.

In its first response to the March 11 disaster, the BOJ last
month doubled funds set aside for purchases of a range of
financial assets and flooded banks with cash to keep lending
rates steady and prevent the money market from seizing up.
($1 = 85.475 Japanese Yen)

(Reporting by Leika Kihara and Rie Ishiguro; Editing by Edmund
Klamann)

RPT-BOJ holds fire on policy, sets loan scheme for quake-hit banks