The Bank of Japan enhanced its massive monetary policy easing, in addition to coordinated measures with other leading central banks, on Monday, to tackle the financial market downturn caused by the concerns over coronavirus outbreak.
The policy board has decided to loosen the monetary policy through conducting various operations including purchases of Japanese government bonds and the US dollar funds-supplying operations.
The bank also introduced a new operation to facilitate corporate financing and decided to actively purchase exchange-trade funds and Japan real estate investment trusts.
As for US dollar liquidity, the BoJ coordinated with the Bank of Canada, the Bank of England, the European Central Bank, the Federal Reserve, and the Swiss National Bank, and lowered the loan rate by 0.25 percent and offer US dollars weekly with an 84-day maturity, in addition to the 1-week maturity operations.
The BoJ board headed by Haruhiko Kuroda, unanimously decided to introduce a new operation to provide loans against corporate debt as collateral at the interest rate of zero percent.
The board also unanimously voted to increase the upper limit to purchase CP and corporate bonds by JPY 2 trillion in total. The bank will continue purchases until the end of September 2020.
The board, in a unanimous vote, decided to purchase ETFs and J-REITs so that their amount outstanding will increase at annual paces with the upper limit of about JPY 12 trillion and around JPY 180 billion.
The board voted 7-2 to retain the interest rate at -0.1 percent on current accounts that financial institutions maintain at the central bank. Also, the board maintained it yield target for 10-year Japanese government bonds at around zero percent.
The BoJ has brought forward the date of monetary policy meeting to March 16 from initially scheduled March 18 and 19.
The bank observed that economic activity has been weak with growing uncertainties over the global economy mainly due to the impact of the outbreak of covid-19. Moreover, financial conditions have become less accommodative, the bank noted.