BOJ Decides on Further Easing to Tackle Coronavirus Fallout

Tokyo, April 27 (Jiji Press)--The Bank of Japan at a policy-setting meeting Monday decided to buy Japanese government bonds unlimitedly for the time being, in an effort to support the Japanese economy which has been seriously battered by the coronavirus outbreak. The central bank decided on additional easing for two consecutive monetary policy meetings of its Policy Board, a development unseen since 2016. The BOJ will step up JGB purchases by abolishing the conventional annual target of around 80 trillion yen, to stem a surge in long-term JGB yields that could be triggered by the large amount of JGB issuance planned by the government for implementing emergency measures to cope with the economic fallout from the viral epidemic. The central bank will conduct "active purchases" of JGBs "without setting an upper limit," the BOJ said in a statement released after Monday's meeting. The Policy Board also decided to expand its purchases of corporate bonds and commercial paper, with the upper limit on the amount outstanding now set at about 20 trillion yen in total, to help firms that are struggling financially in the face of the virus crisis. The upper limit is about triple the amount of 7.4 trillion yen set at the previous monetary policy meeting in March. In addition, the central bank decided to strengthen its special fund-supplying operations aimed at facilitating corporate financing, partly by increasing the number of financial institutions eligible to procure funds from the BOJ without interest payment. The BOJ was set to hold the latest Policy Board meeting for two days from Monday, but the schedule was shortened to one day to reduce COVID-19 infection risks. In a quarterly report released following the policy meeting, the BOJ gave forecasts of 3.0-5.0 pct contraction for Japan's real gross domestic product in fiscal 2020, which started this month, down from its January projections of 0.8-1.1 pct growth, anticipating the negative effects of business suspensions that spread across the country following the government's state of emergency declaration over the virus outbreak earlier in April. "Japan's economy is likely to remain in a severe situation for the time being due to the impact of the spread of the novel coronavirus," the BOJ said in the latest Outlook for Economic Activity and Prices report. "Future developments are extremely unclear, as they could change depending on the timing the spread of COVID-19 subsiding." Based on the assumption that the outbreak will wane on a global basis through the second half of 2020, BOJ policymakers expect Japan's GDP to return to positive growth in fiscal 2021, with their growth estimates ranging from 2.8 pct to 3.9 pct. On the year-on-year rate of change in consumer prices in Japan, the BOJ said it is likely to be "somewhat weak" for the time being, mainly affected by the spread of COVID-19 and the decline in crude oil prices. The quarterly report showed that BOJ policymakers expect the country's core consumer price index, excluding fresh food prices, to fall 0.3-0.7 pct in fiscal 2020 but to show flat to 0.7 pct growth in fiscal 2021. In fiscal 2022, the policymakers' growth projections came to 0.8-1.6 pct for Japan's real GDP and 0.4-1.0 pct for the country's core CPI. END