Bank of Japan extends virus-linked lending programme

TOKYO (AFP) – The Bank of Japan extended an emergency virus-related lending programme but kept its monetary easing policy unchanged yesterday, as the country faces a record spike in new Covid-19 cases.

In May, the central bank launched a new lending scheme aiming to channel funds to small and medium-sized businesses suffering from the economic fallout of the coronavirus pandemic.

At a policy meeting, the Bank of Japan (BoJ) extended the end-date for those measures by six months to September 2021.

It made no change to its ultra-loose monetary policy, however – keeping the key interest rate at minus 0.1 per cent and the 10-year government bond yield target at 0.0 per cent.

“Japan’s economy has picked up, but the pace of improvement is expected to be only moderate while vigilance against the novel coronavirus continues,” the central bank said.

People walk through a famed shopping street in the Harajuku neighbourhood in Tokyo. PHOTO: AP

“Financing, mainly of firms, is likely to remain under stress for the time being,” it added, referring to the extension of the lending programme.

Speaking later, bank boss Haruhiko Kuroda emphasised its commitment to its longstanding policies, including the still-distant goal of two per cent inflation.

“We’re not going to revise the two per cent inflation goal,” he told reporters.

“In regard to the interest rate level, it is expected to hover at the level of the current long and short-term rates or lower.

“We don’t plan on revising the negative interest rate either,” he said, apparently quashing speculation that the long-standing position could soon be up for discussion.

The pandemic has wrought global economic carnage, with Japan only just exiting recession, and many countries have announced massive cash injections.