MNI STATE OF PLAY: BOJ Stays Covid Easy As Policy Lags Big CBs

The Bank of Japan on Friday decided to extend special pandemic fund-providing measures to facilitate corporate financing by smaller firms, illustrating that it remains more dovish than other major central banks on moving on from Covid-19 policies.

The BOJ pledged to continue to support corporate financing by smaller firms, particularly the face-to-face services, by extending measures by six months to the end of September, see: MNI STATE OF PLAY: Pandemic Measures In Focus For BOJ Meeting.

But the BOJ curbed its support to major firms by scaling down its purchases of commercial paper and corporate bonds from the upper limit of JPY20 trillion previously to about JPY2 trillion for CP and JPY3 trillion for corporate bonds, from April next year.

BOJ Governor Haruhiko Kuroda said at a press conference after the policy review that the central bank took every measure to support corporate financing by smaller firms.

“Corporate financing has been improving on the whole but the improvement among the eating and drinking services has been delayed. Corporate financing among the face-to-face services remains severe.”

RECOVERY AHEAD?

Kuroda said in mid-November that a full-fledged recovery of private consumption is necessary for Japan to strengthen the foundation for a powerful recovery.

“The key for the economic outlook is whether face-to-face services consumption no longer remains stagnant,"

Friday’s decisions clearly showed that the BOJ lags other major reviews this week by the U.S. Federal Reserve, the Bank of England and the European Central Bank.

But Kuroda said the BOJ’s monetary policy charts its own course. “Each central bank is managing monetary policy based on its own economic and price development,” including the achievement of price stability target.