JAKARTA (TheInsiderStories) - As predicted, Bank of Japan (BoJ) hold its negative interest rate in the latest meeting at minus 0.1 percent. The central bank first applied the negative interest rates in January 2016 to spur the economic growth and achieve an inflation target of 2 percent.
“We will ease monetary policy further without hesitation if necessary, if the impact of the pandemic worsens,” said governor, Haruhiko Kuroda, in a public statement on Tuesday.
In the latest outlook, BoJ projected that core inflation in fiscal 2021 will be at 0.1 percent, much lower than the projection given last January of 0.5 percent due to the COVID-19 pandemic. The core inflation is estimated at 0.8 percent in 2021 and 1 percent in the following year.
Apart from negative interest rates, the policymakers also maintains a yield curve control policy, whereby the yield for 10-year bonds is kept near zero percent. Kuroda said, the Bank also will purchase a necessary amount of Japanese government bonds (JGB) without setting an upper limit so that 10-year JGB yields will remain at around zero percent.
BoJ also will purchase exchange-traded funds (ETFs) and Japan real estate investment trusts (J-REITs) as necessary with upper limits of about JPY12 trillion (US$110.72 billion) and about JPY180 billion, respectively, on annual paces of increase in their amounts outstanding. In addition, BoJ will purchase commercial papers and corporate bonds with an upper limit on the amount outstanding of about JPY20 trillion in total until the end of September 2021. 2.
“The Bank will continue with Quantitative and Qualitative Monetary Easing (QQE) with Yield Curve Control, aiming to achieve the price stability target of 2 percent, as long as it is necessary for maintaining that target in a stable manner,” said Kuroda.
Then, he informed, BoJ will continue to support financing of the firms and maintain stability in financial markets through the Special Program to Support Financing in Response to the COVID-19, an ample provision of Yen and foreign currency funds without setting upper limits mainly by purchasing JGBs and conducting the US Dollar funds-supplying operations, and purchases of ETFs and J-REITs with upper limits on annual paces of increase in their amounts outstanding.
For the time being, explained Kuroda, the Bank will closely monitor the impact of the COVID- 19 and will not hesitate to take additional easing measures if necessary, and also it expects short and long-term policy interest rates to remain at their present or lower levels.
US$1: JPY103.38
Written by Editorial Staff, Email: theinsiderstories@gmail.com
