Bank of Japan Holds Short- and Medium-Term Interest Rates Steady... Maintains Unlimited Monetary Easing

"Short-term interest rate -0.1%, 10-year government bond remains at 0%"
"0% interest loans for decarbonization equipment investment companies"

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Hyunwoo Lee] The Bank of Japan (BOJ), Japan's central bank, decided on the 16th to keep the short-term interest rate at -0.1% and to continue its current unlimited monetary easing policy by purchasing long-term government bonds without limit to maintain the 10-year government bond yield, a long-term interest rate indicator, at around 0%.

According to the Nihon Keizai Shimbun on the 16th, the Bank of Japan decided to keep medium- and short-term interest rates unchanged at the monetary policy meeting held from the previous day. Accordingly, the short-term interest rate will remain at -0.1% applied to the policy rate balance of the BOJ's current account deposits. For long-term interest rates, the BOJ announced it will continue unlimited purchases of long-term government bonds to keep the 10-year government bond yield at around 0%.

The BOJ also decided to maintain the current scale of asset purchases other than long-term government bonds. Accordingly, purchases of exchange-traded funds (ETFs) will be capped at 12 trillion yen annually (approximately 124.5 trillion KRW), and real estate investment trusts (REITs) will be purchased as needed with an annual balance increase limit of 180 billion yen. For commercial paper (CP) and corporate bonds, purchases will continue up to a limit of 20 trillion yen until the end of March 2022. The BOJ emphasized that it will continue to monitor the impact of COVID-19 and will not hesitate to implement additional quantitative easing policies if necessary.

In addition, the BOJ announced the operation of a new funding supply system to promote investment and lending by financial institutions in response to climate change issues. The system will start within this year and run until 2030, providing long-term funds such as loans at 0% interest to companies investing in decarbonization facilities or purchasing environmental bonds, according to the BOJ.

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