MNI BRIEF: BOJ Notes Virus Uncertainty In Steady Policy Stance

The Bank of Japan board Tuesday noted increased uncertainty on the spread of the Omicron virus variant as it stuck to its baseline recovery scenario and kept policy steady on Tuesday.

“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.”

On Monday, Tokyo and three surrounding prefectures looked to enforce stricter measures on social distancing and protocols as hospital cases rise.

On the monetary policy, the board decided voted 8-to-1 to stand pat on the yield curve control policy and asset purchases, maintaining its recovery scenario based on accommodative financial conditions, and the government’s economic measures. On the policy decision, Goushi Kataoka, a former private-sector economist, dissented but he did not propose any policy changes.

Under a framework adopted in September 2016, the BOJ targets for the overnight interest rate at -0.1%, see: MNI INSIGHT: BOJ Ready To Defend Yield Curve On Any Fed Moves.

The scale of its purchases of ETFs (exchange-traded funds) and J-REITs (Japan real estate investment trusts) remained about JPY12 trillion and about JPY180 billion, respectively, on annual paces of increase in their amounts outstanding.