The shortened Bank of Japan monetary policy meeting for April 2020 has concluded.
- Maintains policy rate at -0.1%
- maintains JGB yield target around 0%
- To increase corporate bond, commercial paper purchases
- expands loan programme to combat coronavirus
- pledges to buy unlimited amount of JGBs, removes pledge to buy JGBs so its holdings increase at annual pace of around 80 trln yen
- to buy up to 20 trln yen of corporate bonds
- to relax rules for its corporate bond, commercial paper purchases
- to extend duration of corporate bonds it buys to 5 years
- will actively buy JGBs, short-term securities to keep yield curve stably low
- to expand type of assets it accepts as collateral for its loan programme aimed at combating coronavirus
- will include state-affiliated financial institutions as eligible entity for loan programme aimed at combating coronavirus
- will mull new fund supply means for financial institutions
- will increase maximum amount of commercial paper and corporate bonds it buys per single issuer to 500 bln yen, 300 bln yen, respectively
- will apply 0.1% interest to outstanding balance of current accounts held by financial institutions at BOJ for those tapping its loan scheme
Quarterly report comments:
- Japan's economy to remain in sever situation for the time being due to coronavirus spread
- consumer inflation likely to be weak due to spread of coronavirus, oil price falls
- Japan's economy likely to improve on pent-up demand once virus impact subsides
- inflation likely to gradually accelerate as economy improves
- expects spread of coronavirus to gradually subside globally towards latter half of this year
Median core CPI forecast for fiscal 2020/21 at -0.7 to -0.3% vs +1.0% in Jan
- board's median core CPI forecast for fiscal 2021/22 at 0-0.7% vs +1.4% in Jan
- median core CPI forecast for fiscal 2022/23 at +0.4 to 1.0%
- for FY 2019 +0.6%
Real GDP forecast for fiscal 2020/21 at -5.0 to -3.0% vs +0.9% in Jan
- for fiscal 2021/22 at +2.8% vs +1.1% in Jan
- for fiscal 2022/23 at +3.9%
- for fiscal 2021/22 at +2.8% to +3.9%
- for FY 2019 -0.4% to -0.1%
In a nutshell
- the near term outlook has gotten worse.
- further out the BOJ expect a rebound (please note the BOJ has pretty much always been optimistic about the future regardless)
- The BOJ is about to become an even bigger buyers of bonds, JGBS, corporate bonds and other corporate paper.
If you'd like full statements:
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BOJ Governor Kuroda will speak later today.
