Business & Economy

Japan’s central bank extends Covid-19 aid program by 6 months

Tokyo, Dec 18 (efe-epa).- The Bank of Japan (BoJ) on Friday extended for six more months a financial assistance program to offset the effects of the Covid-19 pandemic, which is having a negative impact on the country’s economy.

The program was to end in March, but at the two-day meeting on monetary policy that ended Friday, the central bank decided to extend it until September 2021.

According to an official statement, the BoJ, as part of this program, will extend the duration of additional purchases of corporate bonds and commercial paper up to an amount of 20 trillion yen ($193.3 billion).

Assistance to financial entities was also extended for a further six months, until next September, to grant loans under advantageous conditions, mainly to small and medium-sized companies.

“Japan’s economy has picked up, but the pace of improvement is expected to be only moderate while vigilance against the novel coronavirus (COVID-19) continues,” the BoJ statement said.

The bank maintains that although Japan’s exports and industrial production have increased and corporate profits and business sentiment are picking up, “business fixed investment has been on a declining trend.”

When announcing its macroeconomic forecasts in October, the BoJ calculated that due to Covid-19 Japan’s gross domestic product (GDP) will fall by 5.5 percent in the fiscal year that will close on March 31.

Friday’s statement, on the other hand, confirmed that the BoJ maintains its monetary flexibility program, which includes an interest rate of -0.1 percent for short-term deposits of financial entities with the central bank.

It also maintained its decision to keep 10-year government bond yields at around 0 percent, and to continue purchasing these with no upper limit. EFE-EPA


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