MNI REVIEW: BOJ Boosts Easing; To Mull New Policy Tools

     TOKYO (MNI) - The Bank of Japan moved to boost its easy policy Monday,

aiming to strengthen its support for corporate financing and shield the wider

economy, both hard hit by the fallout from the coronavirus outbreak.

     The bank increased the scale of its combined purchases of commercial paper

and corporate bonds to JPY20 trillion from JPY3.2 trillion and JPY4.2 trillion

respectively.

     The BOJ also eased the criteria of purchases of CPs and straight bonds,

increasing the maximum amounts of outstanding of a single issuer's paper from

the current JPY100 billion to JPY500 billion and JPY300 billion, respectively.

     The board also decided to increase the maximum share of the bank's holdings

of CP and corporate bonds as a share of outstanding by a single issuer from the

current 25% to 50% and 30%, respectively.

     --BOOST TO JGB BUYS

     The BOJ also decided on further active purchases of Japanese government

bonds and Treasury bill, removing "at an annual pace of about JPY80 trillion"

from its statement.

     The BOJ said, "in a situation where the liquidity in the bond market

remains low, the increase in the amount of issuance of JGBs and T-bills in

response to the government's emergency economic measures will have an impact on

the market."

     "Taking this into account, the BOJ will conduct further active purchases of

both JGBs and T-bills for the time being, with a view to maintaining stability

in the bond market and stabilizing the entire yield curve at a low level."

     --RATE TARGET

     For now, it kept its overnight target rate unchanged at -0.1%, with the

longer-term yield target unchanged at around 0%, but modified forward guidance,

saying, "The BOJ will closely monitor the impact of the coronavirus and will not

hesitate to take additional easing measures if necessary, and also it expects

short- and long-term policy interest rates to remain at their present or lower

levels."

     The BOJ also strengthened the Special Funds-Supplying Operations to

facilitate corporate financing.

     The BOJ expanded the range of eligible collateral to private debt in

general, including household debt (from about JPY8 trillion to about JPY23

trillion as of end-March 2020).

     The bank decided to increase the number of eligible counterparties (to

mainly include member financial institutions of central organizations of

financial cooperatives).

     Governor Haruhiko Kuroda also ordered staff to move quickly to find new

measures to provide funds for financial institutions and report back at a later

monetary policy meeting.

     Last week,he BOJ announced it would shorten its planned two-day

policy-setting meeting scheduled Monday and Tuesday to a one day meeting.

--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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