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MNI (London)
     TOKYO (MNI) - The Bank of Japan kept monetary policy unchanged Thursday, as
Japan's economy is still expanding moderately despite persisting downside risks
to both activity and prices.
     But the BOJ clarified its forward guidance for policy rates, saying, "the
BOJ intends to maintain the current extremely low levels of short- and long-term
interest rates for an extended period of time, at least through around spring
2020, taking into account uncertainties regarding economic activity and prices
including developments in overseas economies and the effects of the scheduled
consumption tax hike."
     On the monetary policy, the board decided voted 7-2 to stand pat on its
yield curve control policy and asset purchases, maintaining its recovery
scenario as domestic demand remains solid and therefore supporting an economic
recovery mechanism.
     The key points from the BOJ board decision after the latest two-day policy
     --The BOJ board decided to expand eligible collateral for the BOJ's
provision of credit.
     --With regard to debt of companies that have obtained an external credit
rating, the companies should be rated BBB or higher by an eligible rating
     --The BOJ will relax the terms and conditions for the SLF (Securities
Lending Facility), including the reduction of the minimum fee rate and abolition
of the upper limit on the amount of sales per issue.
     --the BOJ will consider the introduction of an ETF lending facility, which
will make it possible to temporarily lend ETFs that the BOJ holds to market
     --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 continue buying JGBs to stabilize the 10-year yield "around
zero percent" but it will also allow the long-term interest rate to "move upward
and downward to some extend" in line with the changes in economic growth and
     -- Officially, the BOJ will maintain the annual pace of its JGB purchases
at around Y80 trillion, although the pace has declined sharply, as accumulated
effects from keeping rates lower through asset purchases have intensified. The
bank noted it will conduct purchases "in a flexible manner."
     -- On forward guidance, board member Yutaka Harada, a former government
economist, dissented, arguing that it was appropriate to further clarify its
relationship with the price stability target. Goushi Kataoka, a former
private-sector economist, was also opposed. He said that it was necessary for
the BOJ to make a commitment to take additional easing measures if it revised
downward its assessment of medium- to long-term inflation expectations.
--MNI Tokyo Bureau; tel: +81 90-2175-0040; email:
--MNI London Bureau; tel: +44 203-586-2225; email:
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