MNI BRIEF: BOJ On Hold; Keeps Forward Guidance; Expands Ops

The Bank of Japan board decided to keep monetary policy unchanged on Wednesday as the policymakers examine the impact of last month's decision to widen the range of its 10-year yield target aimed at restoring the functioning of financial markets.

The BOJ maintained its easing forward guidance for the policy rates, showing the policymakers are vigilant against the near-term downside risk to economy and saw the need to keep easing bias regarding the outlook for monetary policy. The short term policy rate was maintained at -0.1% and the 10-year yield target range was maintained at 50bp around zero percent.

“For the time being, while closely monitoring the impact of Covid-19, the Bank will support financing, mainly of firms, and maintain stability in financial markets, and will not hesitate take additional easing measures if necessary, and it also expects short- and long-term interest rates to remain at their present or lower levels.”

But the BOJ decided to extend the deadline for loans to stimulate bank lending and to include member financial institutions of central organizations of financial cooperatives. The bank also decided to enhance the Funds-Supplying Operations against Pooled Collateral.

The yen weakened sharply against the U.S. dollar after the announcement. The yen fell to around 130.60 from around 128.50 before the decision. (See JPY : USD/JPY Surges On BOJ No Change)