BoJ to grant interest-free loans to help combat climate change
Tokyo, Jul 16 (EFE).- The Bank of Japan (BoJ) announced Friday the creation of an interest-free loan system for commercial banks that help support state initiatives to combat climate change.
The entity plans to mobilize the funds this year and maintain the project in principle until March-end 2031, unless market performance makes it difficult, as it explained in a statement at the end of its two-day monthly meeting on monetary policy.
The funds will be provided for one year, in principle, said the BoJ, describing potential beneficiaries as “financial institutions that disclose a certain level of information on their efforts to address climate change.”
Regarding its monetary policy, the Japanese central bank decided to maintain its ultra-flexible policy, based on a negative short-term interest rate (-0.1 percent) and an extensive program of government bond purchases to keep 10-year bond yields around 0 percent.
This move is aimed at propping up the economic recovery at a time of ongoing instability and fragility due to the Covid-19 pandemic, the main factor that led the BoJ to slightly cut its growth forecast for the Japanese fiscal year 2021, which will last until March 31, 2022.
The BoJ revised down two tenths of a percentage point its estimate of growth of the national gross domestic product to 3.8 percent year-on-year in its quarterly report of economic forecasts, also published Friday.
Compared with the projections of the previous April report, it said “the projected growth rate for fiscal 2021 is somewhat lower due to the impact of Covid-19, but that for fiscal 2022 is somewhat higher.”
The central bank expects the Japanese economy to expand 2.7 percent in 2022, three tenths more than previously estimated, and maintained its forecast at 1.3 percent for 2023.
The BoJ foresees that the economy will recover in line with vaccination progress, the increase in demand, the adaptation of the market to current conditions, and state measures.
On the other hand, the bank expects the country’s inflation to rise 0.6 percent in fiscal 2021, five tenths more than in its previous forecast report, and it also revised the increase for 2022 by one tenth, to 0.9 percent, while keeping its estimate for the following year at 1 percent. EFE