MNI REVIEW: BOJ Boosts Easy Policy; Introduces New Lending Op

--BOJ to provide 1-year funds at zero percent; keep until Sept 2020

--BOJ will ease further if needed, watching impact of virus

     TOKYO (MNI) - The Bank of Japan boosted its easy policy Monday and 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 moved up its regular two-day policy-setting meeting scheduled for

Wednesday and Thursday to a one day meeting Monday.

     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 was also increased to JPY4.2

trillion from JPY3.2 trillion and J-REITs to JPY180 billion from JPY90 billion.

     --LENDING FOR FIRMS

     The board also decided to introduce a new operation to increase banks'

incentives to increase loans to firms.

     The new operation is designed to "provide loans against corporate debts as

collateral at 0% with maturity up to one year."

     "Twice as much as the amount outstanding of the loans will be included in

the Macro Add-on Balances, which are subjected to zero percent, in current

accounts held by financial institutions at the BOJ," the BOJ said.

     This operation will be conducted until the end of September 2020.

     As for the amount of JGBs, the BOJ said that the bank will conduct

purchases in a flexible manner so that their amount outstanding will increase at

an annual pace of about JPY80 trillion.

     --FORWARD GUIDANCE

     The BOJ maintained the forward guidance for the policy rates, saying, "the

BOJ expects short- and long-term interest rates to remain at their present or

lower levels as long as it is necessary to pay close attention to the

possibility that the momentum toward achieving the price stability target will

be lost."

     It added, "the BOJ will closely monitor the impact of COVID-19 for the time

being and will not hesitate to take additional easing measures if necessary."

--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: MMJBJ$,M$A$$$,M$J$$$,MT$$$$,MX$$$$]