MNI BRIEF: BOJ On Hold, Won’t Hesitate To Consider More Easing

The Bank of Japan board on Thursday kept policy steady as expected with the economy largely continued moving in line with the baseline scenario despite persistent downside risks to the economy and prices.

The BOJ will keep the target for the overnight interest rate at -0.1%. The BOJ also left forward guidance for the policy rates, indicating the policymakers are vigilant against the spread of Covid-19, although the state of emergency has been lifted.

"For the time being, the BOJ will closely monitor the impact of Covid-19 and will not hesitate take additional easing measures if necessary, and also it expects short- and long-term interest rates to remain at their present or lower levels."

The board voted 8-to-1 to hold on the yield curve control policy and asset purchases, maintaining its recovery scenario based on accommodative financial conditions, and the government's economic measures. Goushi Kataoka, a former private-sector economist, dissented, but he didn't propose any policy changes.

The BOJ will purchase a necessary amount of JGBs without setting an upper limit so that 10-year JGB yield will remain at around zero percent. The BOJ also left the scale of its purchases of ETFs (exchange-traded funds) and J-REITs (Japan real estate investment trusts) unchanged with upper limits of about JPY12 trillion and about JPY180 billion, respectively, on annual paces of increase in their amounts outstanding.