Bank of Japan expands company loan program
Tokyo, June 16 (efe-epa).- Japan’s central bank decided on Tuesday to expand its loan program for companies affected by the coronavirus as well as to keep its monetary policy measures unchanged.
The policy board of the Bank of Japan (BoJ) approved the measures in a 8-1 vote at the end of its two-day meeting, the bank said in a statement.
The BoJ will expand the interest-free loan program and other liquidity measures for companies to 110 trillion yen ($1.02 trillion), which is 25 trillion yen more than the amount announced initially in May.
These additional funds, which will be financed by an extra budget recently approved by the government, are part of a comprehensive economic stimulus package implemented in a coordinated manner by the Japanese central bank and Prime Minister Shinzo Abe’s administration.
Other key measures adopted earlier by the BoJ monetary policy board in response to the epidemic include the unlimited purchase of government bonds, until now restricted to a volume of 80 trillion yen per year, as well as an increase in the existing cap for the acquisition of corporate and commercial paper bonds.
At its meeting that concluded on Tuesday, the BoJ also opted to keep its monetary easing policy unchanged.
This entails keeping unchanged the short-term benchmark interest rate of -0.1 percent, which it has applied since 2016 for deposits of financial institutions in the bank, and keep the 10-year government bond yields at around 0 percent.
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 abroad,” which has harmed exports, corporate profits and investments and domestic consumption.
The world’s third-largest economy slipped into a technical recession in the first quarter of the year after its gross domestic product shrank 0.6 percent between January and March, following a contraction of 1.9 percent in the last three months of 2019.
“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 abroad, although economic activity is expected to resume gradually,” the bank added.
In the context of the pandemic and falling international crude oil prices, the BoJ also estimated that the consumer price index “is likely to be negative for the time being,” far from the 2 percent annual inflation target fixed by the institution.
The BoJ also reiterated its intention to “take additional easing measures” if necessary. EFE-EPA