Japan's monetary base flat in March from year earlier

Wed, Apr 2 2008, 00:16 GMT
http://www.afxnews.com

TOKYO (Thomson Financial) - Japan's monetary base was unchanged from a year earlier at 88.39 trillion yen in March, according to preliminary data released by the Bank of Japan on Wednesday.

The monetary base rose 0.1 percent in February.

The recent flat trend suggests that the impact of draining extra funds from the short-term money market has waned.

In March 2006, the monetary base dropped for the first time in more than five years after the Bank of Japan abandoned its policy of flooding the short-term money market with extra liquidity to counter deflation.

The monetary base since then has continued to decline as the central bank steadily drained surplus funds from the short-term money market.

Until March 2006, the total funds of Japanese commercial banks kept in current accounts at the central bank amounted to 30 trillion yen, which the central bank gradually reduced to below 9 trillion by August of that year.

The total funds of commercial banks kept in current accounts at the central bank fell 7.4 percent to 7.92 trillion yen in March, declining for the 25th consecutive month.

($1 = 101.69 yen)