MNI INSIGHT:BOJ Likely To End Special Measures After Govt Move

The Bank of Japan is unlikely to extend its special measures to facilitate Covid funding for smaller firms at its Sept 21-22 policy-decision meeting, following a government decision to end its own zero-interest rate and zero-collateral loan programme on Sept. 30, MNI understands.

The BOJ will likely reiterate its forward guidance for policy rates to emphasise that its stance will remain easy at the meeting, and officials will also examine whether to support financing for companies hit by high commodity prices, though commercial banks are viewed as willing to lend to smaller firms. (See: MNI INSIGHT: BOJ Unmoved By Rising Inflation, Slumping Yen).

The latest BOJ data showed loans by city banks rose 1.9% y/y in August to the highest level since April 2021, when they rose 3.9%. Loans by regional banks rose 2.5% y/y in August to the highest level since June 2021, when they rose 2.9%.

The data showed corporate funding demand linked to Covid-19 remained stable but demand for funds to help finance the impact of higher costs was strengthening.