Bank of Japan Holds Monetary Policy Steady in Latest Meeting
Arslan Butt • 1 min read
In its latest meeting, the Bank of Japan (BOJ) has decided to hold its monetary policy unchanged in the hopes of gradual economic recovery in the aftermath of the coronavirus pandemic worldwide. The BOJ did announce a slight increase in its lending package for businesses affected by the pandemic, raising the spending from $700 billion to around $1 trillion.
Economists believe that the contraction in the Japanese economy may be bottoming outand could soon start recovering as Japan and other countries around the world begin easing lockdown restrictions and resuming economic activity. This, coupled with the fact that the BOJ already has an ultra-loose monetary policy, could be the reasons for the BOJ choosing to keep its policy steady in the latest meeting.
As economists expected, the Japanese central bank decided to keep its yield curve control target steady at around -0.1% and 0% for short-term and long-term interest rates respectively. After expanding the scope of various stimulus measures, the BOJ now expects total financial aid to touch around $1 trillion through the various schemes launched by the government.
In its statement announcing its latest monetary policy, the BOJ observed, “Although economic activity will gradually resume, Japan’s economy will remain in a severe state for the time being. Once the impact of the pandemic subsides, the economy is likely to improve.”