BOJ cuts key rate to 0.1%, pumps funds into economy
The Bank of Japan cut its benchmark interest rate to 0.1 percent and said it would buy corporate debt as a deepening recession chokes off funding for businesses.
Governor Masaaki Shirakawa and his colleagues lowered the target for the overnight lending rate from 0.3 percent in a 7- to-1 vote, the central bank said in a statement today in Tokyo. The bank said it would buy commercial paper temporarily and a decision to increase its monthly purchases of government bonds sparked a rally in the market.
The central bank’s second reduction in two months came after the Federal Reserve this week cut its target rate as low as zero, driving the yen to a 13-year high against the dollar. The Bank of Japan’s move to buy corporate debt is designed to ease the cost of borrowing for Japanese companies struggling to obtain financing amid a global credit crunch.
“Whereas the Fed is dramatically expanding its balance sheet to offer support to financial institutions, the Bank of Japan is now expanding its balance sheet to support the corporate sector,” said Glenn Maguire, chief Asia-Pacific economist at Societe Generale SA in Hong Kong.
The yen traded at 89.17 per dollar as of 2:56 p.m. in Tokyo from 89.28 shortly before the decision. Bonds rose, reversing earlier declines, sending the yield on the 10-year bond down 3.5 basis points to 1.225 percent. The Nikkei 225 Stock Average slid 0.9 percent and has lost 44 percent this year.
Share Purchases
The government also decided to purchase commercial paper outright last week, and today said it would buy as much as 20 trillion yen ($223 billion) of shares held by banks to boost their capital.
Prime Minister Taro Aso and Finance Minister Shoichi Nakagawa said over the past week they wanted the bank to play its part in adding cash to the economy to help companies borrow. Commercial paper markets this month touched the highest in at least the past four years.
Tadao Noda was the sole board member to oppose today’s rate decision. Shortly before the announcement, investors saw a 50 percent chance that the central bank would lower the key rate, according to calculations made by JPMorgan Chase & Co. based on interest-rate swaps trading.
The central bank said it will raise its monthly government bond purchases from lenders, its main tool for adding funds into the banking system, to 1.4 trillion yen ($15.6 billion) from 1.2 trillion yen, the first increase since October 2002. It will broaden the range of debt it buys to include 30-year, floating- rate and inflation-indexed bonds.
Economy ‘Deteriorating’
The policy board cut its assessment of the economy, saying “conditions have been deteriorating and are likely to increase in severity.” In November, it said growth had become “increasingly sluggish.”
The global economy is in the worst state since the Great Depression, intensifying the risk for a prolonged slump in Japan, Shirakawa told parliament on Dec. 16.
“Japan’s economy has declined at an unprecedented pace in the current quarter,” said Jun Ishii, chief fixed-income strategist at Mitsubishi UFJ Securities Co. in Tokyo. “In particular, the auto industry, which widely affects other sectors and is vital for economic growth, is heading for a decline.”
The Fed’s reduction brought the U.S. key rate lower than Japan’s benchmark for the first time since 1993, making the yen a higher-yielding currency. The Japanese currency has gained 25 percent this year, eroding profits for exporters that are already cutting jobs, production and spending as global demand collapses.
‘Swift Action’
Honda Motor Co. cited the yen’s gains and slumping sales as reasons for slashing its full-year profit forecast by 62 percent this week. President Takeo Fukui described the currency’s level of around 89 yen to the dollar as “abnormal” and called on the government and central bank to take “swift action.”
Confidence among Japan’s major manufacturers fell the most in 34 years, the central bank’s quarterly Tankan survey showed this week, indicating the first recession since 2001 is likely to deepen.
The world’s second-largest economy could shrink 0.8 percent next fiscal year if the government doesn’t implement stimulus measures, Economic and Fiscal Policy Minister Kaoru Yosano said today. The Cabinet Office today predicted zero growth for the year starting April 1.
Big tribute to Michelangelo
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Michelangelo, La Dotta Mano which translates to The Wise Hand, is a volume of works by the Renaissance master. A copy was donated to the New York Library, where it was placed next to the legendary Gutenberg Bible, which automatically put the work in a prestigious ranking. Michelangelo, La Dotta Mano was presented to Tan Sri Dr Francis Yeoh at the A Journey Through Time 2008 exhibition by vice-president of The Fondazione FMR Fabio Lazarri at the Starhill Gallery. With a retail price of RM500,000 and weighing 21kg, Michelangelo, La Dotta Mano is regarded as the most beautiful book in the world by publishers. The book comes in a sleek black case, its own stand and a 500-year guarantee.
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NST, December 19, 2008
By Farwin Hamid
TO celebrate and remember the works of Michelangelo, Fondazione FMR-Marilena Ferrari, a fine art publishing house, has created a massive construction called the Michelangelo, La Dotta Mano.
Michelangelo, La Dotta Mano which translates to The Wise Hand, is a volume of works by the Renaissance master.
It includes detachable reproductions of drawings by Michelangelo on handmade folios created according to centuries-old traditions, original photographs by Italian photographer Aurelio Amendola and writings by several Italian scholars, including Giorgio Vasari, Antonio Paolucci and Pina Ragonieri.
The book itself is a work of art and the magic of it all is in the details: the cover which is made of marble, is a replica of Madonna della Scala (Madonna of the Steps), carved from the same Polvaccio quarries which Michelangelo used in his work.
And the book’s measurements comply with the Fibonacci Sequence and Golden Ratio, which have been used throughout the ages in architecture, sculpture and painting to represent the universal law of harmony.
With only 33 exemplars of the incredible work of art in a book form, each copy of the Michelangelo, La Dotta Mano takes approximately two years to produce, out of which four months is taken up just to sculpt the marble cover.
A copy was donated to the New York Library, where it was placed next to the legendary Gutenberg Bible, which automatically put the work in a prestigious ranking.
Fondazione FMR-Marilena Ferrari, together with the FMR-Marilena Ferrari fine art publishing house, has in fact promoted within Italy, a programme of entrepreneurial, artistic and cultural value entitled La Civilt della Bellezza.
The programme is the brainchild of Marilena Ferrari, President of the Fondazione and of the publishing house, having been inspired by the Italian Renaissance, the period representing the height of Italy’s artistic and cultural magnificence.
Michelangelo was also accredited for his brilliant work at the scenes from Genesis on the Ceiling and The Last Judgment on the altar wall of the Sistine Chapel in Rome.
Later in life, he designed the dome of St Peter’s Basilica in the same city and revolutionised classical architecture with his use of the giant order of pilasters.
Michelangelo, La Dotta Mano was presented to Tan Sri Dr Francis Yeoh at the A Journey Through Time 2008 exhibition by vice-president of The Fondazione FMR Fabio Lazarri at the Starhill Gallery.
Italian ambasador to Malaysia Alessandro Bussaca and National Art Gallery director-general Dr Mohamed Najib Ahmad Dawa were among those present.
With a retail price of RM500,000 and weighing 21kg, Michelangelo, La Dotta Mano is regarded as the most beautiful book in the world by publishers. The book comes in a sleek black case, its own stand and a 500-year guarantee.
