BOJ dials back pandemic funding as global central banks eye post-COVID era
The Bank of Japan on Friday dialed back emergency pandemic-funding but maintained ultra-loose policy and extended financial relief for small firms, cementing expectations it will remain among the most dovish central banks for the foreseeable future.
The BOJ's decision, underpinned by cautious optimism that the economic damage wrought by coronavirus crisis is gradually healing, came hours after Britain became the first G7 economy to hike interest rates since the onset of the pandemic.
In a widely expected decision, the BOJ on Friday maintained its short-term rate target at -0.1% and that for 10-year bond yields around 0%.
The BOJ also extended by six months a March 2022 deadline for its pandemic-relief loan scheme with tweaks to conditions, to ensure commercial banks keep channeling funds to small firms.
But it decided to slow purchases of corporate bonds and commercial paper to pre-pandemic levels from April, in a nod to sharp improvements in big firms' financial conditions.
The BOJ maintained its assessment Japan's economy was picking up as a trend, but cautioned that developments surrounding the pandemic and supply constraints have clouded the outlook.
That uncertainty, with Japan's consumer inflation stuck well below its 2% target and the economic recovery still fragile, makes it a near certain bet that the BOJ will likely maintain easy monetary policy much longer than its major counterparts.
Reference: Reuters
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