Bank of Japan keeps policy steady, eyes recovery from pandemic

Marco Green
June 16, 2020

"Japan's economy is likely to remain in a severe situation for the time being due to the impact of COVID-19 at home and overseas, although economic activity is expected to resume gradually", the bank said following a two-day policy meeting.

"There's a small chance that the central bank could increase the size of its loan program, but given that there was no certain limit announcement, the news could have a tempered effect". After the Japanese economy slipped into a recession earlier this year, the BOJ injected cash into its banking sector and imposed a stiff ceiling on interest rates, in hopes of sustaining struggling sectors like retail and the auto industry.

The central bank will also stick with its policy of buying unlimited amounts of government bonds to stimulate the economy.

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The bank also left unchanged its prognosis of the Japanese economy, which it said "has been in an extremely severe situation due to the impact of the novel coronavirus (COVID-19) at home and overseas", which has harmed exports, corporate profits and investments and domestic consumption.

In a widely expected move, the BOJ maintained its yield curve control targets at -0.1% for short-term interest rates and 0% for long-term rates.

The BOJ said it expects to pump around 110 trillion yen ($1 trillion) to the economy via its market operations and lending facilities aimed at combating the hit from the health crisis.

"With regard to the outlook, Japan's economy is likely to remain in a severe situation for the time being due to the impact of COVID-19 at home and overseas, although economic activity is expected to resume gradually", the bank added.

Other reports by Click Lancashire

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