MNI POLICY: BOJ Has 2 Ways On Holding Extra Policy Meeting

By Hiroshi Inoue

     TOKYO (MNI) - If market volatility continues and the yen continues to

strengthen towards JPY100, the Bank of Japan has 2 options open to it regarding

how to meet -- it can either call an extraordinary meeting that will be held in

addition to the scheduled March 18-19 meet, or it can just bring the scheduled

meeting forward, MNI understands.

     Historically, when faced with the possibility of inter-meeting policy

action, the BOJ has brought forward the following scheduled meet. However, this

time, it may prefer to call an additional extraordinary meeting, leaving it the

option to consider further action if needed at the regular meet.

     Although no decision has been taken yet as to whether an early decision on

policy is needed, a repeat of the volatility in financial markets that saw

dollar-yen trade below JPY105 on Friday could force the bank's hand.

     Previously announced inter-meeting 'emergency' measures, in

October/November 2008 and March 2011 both saw the BOJ bring forward the

following meeting rather than instigate an additional one.

     But with a concern that further easing by both the European Central Bank

and the Federal Reserve on March 12 and 18 respectively may need a response in

Tokyo, the BOJ is reluctant to give up the option of responding to yen strength

on March 19.

     Japan's government is likely to announce a second round of emergency

measures to support companies hit by the coronavirus as soon as Tuesday, which

could prompt the BOJ to consider complimentary measures, including targeted

lending.

     G7 finance ministers and central bank governors said last week they would

use all appropriate policy tools to achieve strong, sustainable growth and

safeguard against risks from the coronavirus outbreak, which has increased

global recession fears.

--MNI Tokyo Bureau; tel: +81 90-2175-0040; email: hiroshi.inoue@marketnews.com

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

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