Bank of Japan offers 10 trillion in emergency funding to banks

JAPAN&rsquo;S central bank announced yesterday that it would offer banks more short-term funds in a plan designed to avert the world&rsquo;s second largest economy slipping back into recession.<br /><br />Following an emergency meeting, the Bank of Japan said it was offering banks &yen;10 trillion (&pound;69.43bn) in three-month funds at a rate of 0.1 per cent.<br /><br />The Japanese government welcomed the move but analysts said it would do little to tackle deflation, although by lowering lending rates they may halt the currency&rsquo;s rally.<br /><br />The central bank&rsquo;s policy decision disappointed markets, which had been ready for a return to full quantitative easing. The central bank&rsquo;s governor said that the policy was QE &ldquo;in the broad sense that we are trying to ensure banks are not faced with liquidity constraints&rdquo;.