JAKARTA (TheInsiderStories) -The policy board of the Bank of Japan (BoJ) applied a negative interest rate of minus 0.1 percent to the Policy-Rate Balances in current accounts held by financial institutions at the Bank, said the governor today (10/29). The Bank also will purchase a necessary amount of Japanese government bonds (JGBs) without setting an upper limit so that 10-year yields will remain at around zero percent.
The governor, Haruhiko Kuroda in a virtual conference, stated the yields may move upward and downward to some extent mainly depending on developments in economic activity and prices. He said, the Bank will actively purchase exchange-traded funds (ETFs) and Japan real estate investment trusts (J-REITs) for the time being, so that their amounts outstanding will increase at annual paces with the upper limit of about JPY12 trillion (US$114.96 billion) and about JPY180 billion, respectively.
“The Bank will purchase these assets so that their amounts outstanding will increase at annual paces of about JPY6 trillion and about JPY90 billion, respectively. With a view to lowering risk premia of asset prices in an appropriate manner, the Bank may increase or decrease the amount of purchases depending on market conditions,” said the notes.
As for commercial paper and corporate bonds, the policymakers will maintain their amounts outstanding at about JPY2 trillion and about JPY3 trillion, respectively. In addition, until the end of March 2021, it will conduct additional purchases with the upper limit of the amounts outstanding of JPY7.5 trillion for each asset.
Kuroda conveyed, BoJ also will continue with “Quantitative and Qualitative Monetary Easing with Yield Curve Control,” aiming to achieve the price stability target of 2 percent, as long as it is necessary for maintaining that target in a stable manner. He added, it will continue expanding the monetary base until the annual rate of increase in the observed consumer price index (all items less fresh food) exceeds 2 percent and stays above the target in a stable manner.
The central bank, said the governor, will continue to support financing mainly of firms and maintain stability in financial markets through the Special Program to Support Financing in Response to the COVID-19 and ample provision of Yen and foreign currency funds without setting upper limits mainly by purchasing JGBs and conducting the US Dollar funds-supplying operations.
In addition, the BoJ will actively purchases of ETFs and J-REITs. He said, the central bank will closely monitor the impact of the COVID-19 and will not hesitate to take additional easing measures if necessary, and also it expects short- and long-term policy interest rates to remain at their present or lower levels.
Kuroda revealed, the central bank will also extend the March deadline for its crisis response package. A decision is expected in December or January.
US$1: JPY104.38
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