MNI REVIEW: BOJ On Hold; No Hesitation If Action Necessary

--Sees Lending Programs For Smaller Companies Working Well

     TOKYO (MNI) - The Bank of Japan left monetary policy unchanged Tuesday, as

widely expected, seeing the recently introduced lending programs to facilitate

financing for smaller firms' working smoothly, with bank lending growing.

     The BOJ left its short-term policy interest rate at -0.1% and the long-term

interest rate target at 'around zero percent'.

     The BOJ noted that the scale of the special lending program rose to JPY110

trillion from JPY75 trillion at the end of April, as the government has

increased zero-interest lending to smaller firms in the second supplementary

budget.

     --VIRUS UNCERTAINTIES

     The BOJ maintained its severe outlook as its economic assessment, saying,

"Japan's economy is likely to remain in a severe situation for the time being

due to the impact of Covid-19 at home and abroad."

     The BOJ also warned, "There have been extremely high uncertainties over the

consequence from Covid-19 and the magnitude of their impact on domestic and

overseas economies."

     "In addition, it is necessary to pay close attention to whether, while the

impact of the Covid-19 remains, firms' and households' medium- to long-term

growth expectations do not decline substantially and the smooth functioning of

financial intermediation will be ensured with financial system stability being

maintained."

     The full text of the BOJ meeting results can be found here:

     https://www.boj.or.jp/en/announcements/release_2020/k200616a.pdf

--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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