Bank of Japan Discusses Additional Stimulus... Considering Removal of Government Bond Purchase Limit

[Image source=AP Yonhap News]

[Asia Economy Reporter Kwon Jae-hee] The Bank of Japan is reportedly discussing a plan to remove the limit on government bond purchases in response to the economic recession caused by the novel coronavirus infection (COVID-19), according to the Nihon Keizai Shimbun on the 24th.

According to the report, the Bank of Japan is known to be discussing additional monetary easing measures centered on this plan at the Monetary Policy Meeting scheduled for the 27th.

The Bank of Japan is considering removing the annual limit of 80 trillion yen (approximately 918 trillion won) on government bond purchases, allowing unlimited purchases of government-issued bonds.

This is interpreted as a measure to prepare for the possibility of increased pressure on interest rates as government bond issuance surges in response to the COVID-19-induced economic recession.

Additionally, the Bank of Japan is also discussing doubling the purchase limits for corporate bonds and commercial paper to support corporate financing.

Currently, the purchase limits for corporate bonds and commercial paper are 4.2 trillion yen and 3.2 trillion yen, respectively.

Meanwhile, at the Monetary Policy Meeting held on the 16th of last month, the Bank of Japan expanded the target amount for exchange-traded fund purchases to 12 trillion yen annually from 6 trillion yen, and also increased the purchase limits for corporate bonds and commercial paper by 1 trillion yen each.

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