Bank of Japan Extends COVID-19 Response Monetary Easing Policy Until March Next Year

"Inflation Rate Still Below Target"

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Kim Suhwan] The Bank of Japan, Japan's central bank, has decided to continue its current monetary easing policy, which targets a short-term policy interest rate of -0.1% and guides the yield on 10-year government bonds, a benchmark for long-term interest rates, to around 0%.

On the 18th, the Bank of Japan decided to maintain this large-scale monetary easing policy at a monetary policy meeting chaired by Governor Haruhiko Kuroda.

The Bank of Japan also decided to continue its policy of purchasing exchange-traded funds (ETFs), a means to stimulate the stock market, with an annual purchase limit set at 12 trillion yen, adjusting purchases according to market conditions.

Additionally, the deadline for the fund supply support policy in response to COVID-19 was extended by six months, from the end of September this year to the end of March next year.

Furthermore, at this meeting, the Bank of Japan decided to introduce a support policy within this year to help private financial institutions increase investments aimed at addressing climate change.

Specific operational plans related to this will be finalized and announced at the monetary policy meeting in July this year.

The decision to maintain the monetary easing policy by the Bank of Japan is based on the judgment that Japan's current inflation rate is far below the Bank of Japan's own target of 2%.

According to the government announcement on the day, the core Consumer Price Index (CPI), which reflects the overall price trend for Japanese households, rose by 0.1% year-on-year as of May.

The Bank of Japan stated that the core CPI inflation rate will remain around 0% in the short term and gradually increase, while also acknowledging the uncertainties caused by the COVID-19 pandemic.

Regarding the current economy, the Bank of Japan maintained its previous assessment that, despite ongoing difficulties due to COVID-19, the economy is in a recovery phase. It also analyzed that exports and production are steadily increasing in line with the global economic recovery.

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