BoJ eased monetary conditions but kept rates on hold – UOB

Senior Economist at UOB Group Alvin Liew gives his views on the recent BoJ event.

Key Quotes

“Following the footsteps of the Federal Reserve, the Bank of Japan (BOJ) brought forward its March monetary policy meeting (MPM) to Monday (16 Mar), replacing the regular review on 18/19 March. But it was of little effect as the BOJ announced that it will keep its short term and long term policy rates unchanged. It did ease a part of its monetary policy stance by doubling its purchases of exchange-traded funds (ETFs) and J-REITS to annualized paces of JPY12 trillion and JPY180 billion.”

“The BOJ’s decision to maintain its short term Policy-rate at -0.1%, keep JGB 10-year yield at 0%, the Yield Curve Control (YCC) measures and JGB purchases at annual pace of JPY80 trillion unchanged from its previous decision in January, was again not unanimous (7-2 vote).”

“As announced earlier by the Fed, the BOJ together with the central banks of Canada (BOC), UK (BOE), Eurozone (ECB), Switzerland (SNB) and the US (Fed) will provide ample US dollar funding, at a lower loan rate (by 0.25%) and offer US dollars on a weekly basis with an 84-day maturity. This is in addition to the 1-week maturity operations the BOJ currently offers.”

“Another new measure introduced by the BOJ (via a unanimous vote) was the Special Funds Supplying Operations to Facilitate Corporate Financing regarding the Novel Coronavirus (COVID-19). The BOJ will also increase the upper limit to buy commercial paper (CP) and corporate bonds by JPY2 trillion to the amounts outstanding of about JPY3.2 trillion and JPY4.2 trillion, with the additional buying continuing till End-Sep 2020.”