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BOJ expands support for companies hit by COVID-19 pandemic
From:Xinhua  |  2020-06-16 19:31

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TOKYO, June 16 (Xinhua) -- The Bank of Japan (BOJ) on Tuesday opted to broaden its financial support for companies hit by the COVID-19 pandemic, while leaving unchanged its ultra-easy monetary policy in a bid to underpin the recession-hit economy.

At the conclusion of its policy setting meeting, the BOJ said it will expand its corporate financing support measures from 75 trillion yen to 110 trillion yen (1.02 trillion U.S. dollars).

The expanded program is aimed at supporting the central bank's move last month to introduce 30 and 25 trillion yen interest-free loans to small and medium-sized companies and larger companies, respectively.

The BOJ also said it will maintain its annual target for corporate bond and commercial paper purchases at 20 trillion yen (186 billion U.S. dollars).

As for the state of Japan's economy, the BOJ said it is in a severe situation, with the outlook also looking grim for the time being, but expected to improve.

"Japan's economy has been in an extremely severe situation due to the impact of the novel coronavirus (COVID-19) at home and abroad. Overseas economies have been depressed significantly, reflecting the impact of the COVID-19 pandemic," the BOJ said.

The bank went on to say that in this situation, exports and industrial production have declined substantially, corporate profits and business sentiment have deteriorated, and the pace of increase in business fixed investment has slowed.

"With the continuing impact of COVID-19, the employment and income situation has shown some weakness, and private consumption has decreased significantly, mainly in services such as eating and drinking as well as accommodations," the central bank said, adding that housing investment has declined moderately and public investment increased moderately.

Looking ahead the BOJ said, "Japan's economy is likely to remain in a severe situation for the time being due to the impact of COVID-19 at home and abroad, although economic activity is expected to resume gradually."

"Thereafter, as the impact of COVID-19 subsides, the economy is likely to improve, supported by accommodative financial conditions and the government's economic measures, as well as through the expected materialization of pent-up demand and a projected recovery in production from the decline brought about by COVID-19," the bank said in a statement released after the conclusion of its two-day policy meeting.

As for its interest rates, the BOJ opted not to plunge its short-term rates further into negative territory, past the current level of 0.1 percent, amid concerns such a move would diminish profits at commercial banks.

The central bank said it also remained committed to buying government bonds in a flexible manner so as to guide long-term yields at close to zero percent. Enditem