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Japan Maintains Monetary Stimulus

bankofjapan jun20 17sep20 lt

The Bank of Japan maintained its massive monetary policy stimulus and slightly lifted its assessment about the economy on Thursday, after Yoshihide Suga took charge as new Prime Minister.

The Policy Board of the BoJ headed by Haruhiko Kuroda voted 8-1 to retain the interest rate at -0.1 percent on current accounts that financial institutions maintain at the central bank.

The bank will continue to purchase necessary amount of Japanese government bonds without setting an upper limit so that 10-year JGB yields will remain at around zero percent.

The bank will actively buy exchange-traded funds and Japan real estate investment trusts so that their outstanding amounts will increase at annual paces with the upper limit of about JPY 12 trillion and around JPY 180 billion, respectively.

As for CP and corporate bonds, the bank will maintain their outstanding amounts at about JPY 2 trillion and JPY 3 trillion, respectively.

The bank has lifted its assessment, saying that the economy has started to pick up with economic activity resuming gradually, although it has remained in a severe situation due to the impact of the novel coronavirus.

The BoJ observed that exports and industrial production have turned to a pick-up, while corporate profits and business sentiment deteriorated. Business fixed investment has been on a declining trend.

The bank reiterated that it will not hesitate to take further monetary policy easing if required, and it expects short- and long-term policy rates to remain at their present or lower levels.

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