Bank of Japan Extends Corporate Funding Support for COVID-19 Response by 6 Months... Maintains Monetary Easing

BOJ to Consider Monetary Easing Measures to Achieve '2% Inflation Target'

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Jeong Hyunjin] The Bank of Japan (BOJ) has decided to extend the deadline for corporate funding support measures introduced in response to the novel coronavirus infection (COVID-19) by six months, maintaining them until the end of September next year.

According to NHK and other sources on the 18th, the BOJ announced that it made this decision unanimously at the two-day Monetary Policy Meeting held until that day. This move comes amid concerns that the economy may stagnate due to the resurgence of COVID-19, and additional extensions will be considered if necessary.

So far, the BOJ has been conducting special operations (open market operations) worth 120 trillion yen by purchasing commercial paper (CP) and corporate bonds up to a combined limit of 20 trillion yen (approximately 21.27 billion KRW) to enable companies to borrow funds, and supplying loans to financial institutions under favorable conditions. These measures were originally scheduled to end in March next year but have now been extended to September next year.

Along with this, the BOJ will maintain its monetary easing policy by keeping the short-term interest rate at minus (-) 0.1% as it is currently, and guiding the 10-year government bond yield, a long-term interest rate indicator, to around 0%.

Since January 2013, the BOJ has implemented a "2% inflation target system," but it has never achieved this target so far. To address this, it announced that it will "conduct a review for more effective and sustainable monetary easing." While stating that the core monetary policies, such as the use of short- and long-term interest rates, which form the basis of the current monetary easing policy, "are functioning appropriately and do not need to be changed," it also said, "Various measures will be reviewed, and results will be presented with the aim of making a decision by March 2021."

BOJ Governor Haruhiko Kuroda is scheduled to hold a press conference in the afternoon of the same day.

This content was produced with the assistance of AI translation services.