BOJ meets next week – eyes expanding cheap loans to spur bank lending

The BOJ meets next week (February 17-18)

There is little expectation of change in monetary policy, but members are likely to consider expanding a pair of lending programs they see as supporting the BOJ’s efforts to achieve a stable 2% inflation target
The BOJ wants commercial banks to reduce the amount of cash parked in JGBs and increase exposure to riskier assets such as loans
The BOJ offers loans at an annual interest rate of 0.1% to commercial banks that increase lending to customers
There is an end-March deadline to the programs
The board must decide either at their meeting next week or in March (10-11) whether to continue them

“There aren’t any good and decisive reasons to end those programs now,” said Takahiro Sekido, Japan strategist at Bank of Tokyo-Mitsubishi UFJ.