BOJ policy statement - eases monetary policy further

Author: Eamonn Sheridan | Category: Central Banks

The shortened Bank of Japan monetary policy meeting for April 2020 has concluded. 

  • Maintains policy rate at -0.1%
  • maintains JGB yield target around 0%


  • To increase corporate bond, commercial paper purchases
  • expands loan programme to combat coronavirus
  • pledges to buy unlimited amount of JGBs, removes pledge to buy JGBs so its holdings increase at annual pace of around 80 trln yen
  • to buy up to 20 trln yen of corporate bonds
  • to relax rules for its corporate bond, commercial paper purchases
  • to extend duration of corporate bonds it buys to 5 years
  •  will actively buy JGBs, short-term securities to keep yield curve stably low
  • to expand type of assets it accepts as collateral for its loan programme aimed at combating coronavirus
  • will include state-affiliated financial institutions as eligible entity for loan programme aimed at combating coronavirus
  •  will mull new fund supply means for financial institutions
  • will increase maximum amount of commercial paper and corporate bonds it buys per single issuer to 500 bln yen, 300 bln yen, respectively
  •  will apply 0.1% interest to outstanding balance of current accounts held by financial institutions at BOJ for those tapping its loan scheme
Quarterly report comments:
  • Japan's economy to remain in sever situation for the time being due to coronavirus spread 
  • consumer inflation likely to be weak due to spread of coronavirus, oil price falls
  • Japan's economy likely to improve on pent-up demand once virus impact subsides
  •  inflation likely to gradually accelerate as economy improves
  •  expects spread of coronavirus to gradually subside globally towards latter half of this year
Median core CPI forecast for fiscal 2020/21 at -0.7 to -0.3% vs +1.0% in Jan
  • board's median core CPI forecast for fiscal 2021/22 at 0-0.7% vs +1.4% in Jan
  • median core CPI forecast for fiscal 2022/23 at +0.4 to 1.0%
  • for FY 2019 +0.6%

Real GDP forecast for fiscal 2020/21 at -5.0 to -3.0% vs +0.9% in Jan

  • for fiscal 2021/22 at +2.8% vs +1.1% in Jan
  • for fiscal 2022/23 at +3.9%
  • for fiscal 2021/22 at +2.8% to +3.9%
  • for FY 2019 -0.4% to -0.1%

In a nutshell
  • the near term outlook has gotten worse. 
  • further out the BOJ expect a rebound (please note the BOJ has pretty much always been optimistic about the future regardless)
  • The BOJ is about to become an even bigger buyers of bonds, JGBS, corporate bonds and other corporate paper.

 If you'd like full statements:
 
--
BOJ Governor Kuroda will speak later today.

The shortened Bank of Japan monetary policy meeting for April 2020 has concluded. 
See here for global coronavirus case data
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