BoJ: Further stimulus in the pipeline – UOB

Senior Economist at UOB Group Alvin Liew reviewed the latest BoJ event.

Key Quotes

“In its scheduled Monetary Policy Meeting (MPM) on Tuesday (16 Jun), the Bank of Japan (BOJ) as widely expected, kept all of its existing monetary policy easing measures (policy interest rate at -0.1% and yield curve control of the 10-year JGB yield at 0%) unchanged. Like the previous meeting, this was not a unanimous decision (8-1) as BOJ policy board member Goshi Kataoka dissented again.”

“In the previous unscheduled 22 May 2020 MPM, the BOJ introduced a new fund-provisioning measure to further support financing mainly of small and medium-sized firms/enterprises (SME). Under its Special Program to Support Financing in Response to the Novel Coronavirus (COVID19) (i.e. the Special Program), the BOJ had three measures.”

“The purchases of commercial paper (CP) and corporate bonds (measure 1) remains unchanged at JPY20 trillion while measures 2 and 3 (collectively called special operation) are now expected to be worth JPY90 trillion (from previous estimate of JPY55 trillion). So collectively, the three measures under the Special Program will amount to JPY 110 trillion (US$1 trillion) to the economy via its market operations and lending facilities.”

“The central bank remains cautious about the outlook as it expects Japan to “remain in a severe situation for the time being due to the impact of COVID-19 at home and abroad, although economic activity is expected to resume gradually.”