MNI POLICY: BOJ Minutes: Agrees Easing; Virus Impact To Linger

--Minutes To BOJ Mar 16 Meet Show Initial Covid-19 Reaction

     TOKYO (MNI) - Having brought forward a policy decision by two days, the

Bank of Japan judged on March 16 that it was appropriate to enhance monetary

easing, with a view to doing the utmost to ensure continued funding for

companies and maintaining stability in financial markets, the minutes of the

meeting published Friday show.

     The BOJ boosted easy policy at the meeting, saying it will not hesitate to

act again to support smaller firms' financing that has been battered by the

fallout from the spread of the coronavirus and to shield the wider economy from

its impact.

     The BOJ must "prevent firms' and households' sentiment from deteriorating,

given the following facts that reflected the outbreak of COVID-19: financial

markets had been unstable, as seen particularly in significant fluctuations in

the stock market; and concern over financial positions had become apparent,

mainly among small and medium-sized firms," the minutes showed.

     "One member expressed the view that, in this situation, where preventive

measures had been taken against the spread of COVID-19, what was required of

monetary policy was not to stimulate aggregate demand," the minutes showed.

     The BOJ moved up its regular two-day policy-setting meeting scheduled for

March 18-19 to a one day meeting on March 16.

     --INCREASED PURCHASES

     The BOJ left its yield curve control policy unchanged, keeping the

short-term interest rate at -0.1% and the long-term policy interest rate at

around zero percent, but increased the scale of its purchases of ETFs to JPY12

trillion from JPY6 trillion and of commercial paper to JPY3.2 trillion from JPY

2.2 trillion.

     The scale of purchases of straight bonds were also increased. Board members

didn't discuss deepening the negative interest rate at the meeting, according to

the disclosed minutes.

     --UNCERTAINTIES

     The minutes also showed, "members agreed that there had been significant

uncertainties over the consequences of the outbreak of COVID-19 and over the

size and the persistence of their impact on the economy."

     "One member said that, as the outlook entailed considerably high

uncertainties, such as the extent and duration of the downward pressure on the

economy, a clear projection could not be made at this point," the minutes noted.

     Some members pointed out that, while the disease seemed to be starting to

recede in China, the impact could be prolonged and significant, considering the

global spread of the disease.

     "One member expected that the growth pace of the global economy would pick

up in the second half of 2020, but also noted that the situation could not be

viewed optimistically," according to the minutes.

--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

[TOPICS: MAJDS$,MMJBJ$,M$A$$$,M$J$$$]