MNI BRIEF: BOJ On Hold; Won’t Hesitate To Take More Easing

The Bank of Japan board on Friday held monetary policy steady as the economy largely continued moving in line with the baseline scenario despite downside growth and price risks heightened by the pandemic.

The BOJ also left the forward guidance for the policy rates, indicating the policymakers are vigilant on the prolonged coronavirus impact on the economy and financial markets.

"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."

ONE DISSENT

On the monetary policy, the board decided voted 8-to-1 to maintain the yield curve control policy and asset purchases, staying with 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.

Under the yield curve control framework adopted in September 2016, the BOJ will keep the target for the overnight interest rate at -0.1%. 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.