The BOJ meets next week (February 17-18)

  • There is little expectation of change in monetary policy, but members are likely to consider expanding a pair of lending programs they see as supporting the BOJ’s efforts to achieve a stable 2% inflation target
  • The BOJ wants commercial banks to reduce the amount of cash parked in JGBs and increase exposure to riskier assets such as loans
  • The BOJ offers loans at an annual interest rate of 0.1% to commercial banks that increase lending to customers
  • There is an end-March deadline to the programs
  • The board must decide either at their meeting next week or in March (10-11) whether to continue them

“There aren’t any good and decisive reasons to end those programs now,” said Takahiro Sekido, Japan strategist at Bank of Tokyo-Mitsubishi UFJ.

More here: BOJ Eyes Expanding Cheap Loans To Spur Bank Lending