Tokyo, Apr 27 (IANS): The Bank of Japan (BoJ) on Monday decided to ease its monetary policy by expanding its government and corporate bond purchase programs to soften the economic impact from the coronavirus pandemic.
The central bank said in a statement that it was necessary to "further enhance monetary easing" since the third-largest economy of the world has been in an "increasingly severe situation due to the impact of the spread of the novel coronavirus", reports Efe news.
Among the new measures adopted by the bank was the unlimited purchase of government bonds, until now restricted to a volume of 80 trillion yen per year ($745.18 billion), as well as an increase in the existing cap for the acquisition of corporate and commercial paper bonds.
The bank will now be able to purchase these financing instruments for the private sector at a maximum annual rate of 20 trillion yen, about five times more than the rate at which it has been acquiring them so far.
With these additional measures, the BoJ aims to address the decline of the country's economy, which according to the bank's new forecasts, will experience a contraction of between 5 and 3 per cent in the current fiscal year, which began on April 1 and will end on March 31, 2021.
The forecast made by BoJ on Monday on the performance of the Japanese economy contrasts with the outlook it made in its previous meeting in January when it predicted an annual growth of the country's gross domestic product in the current fiscal year of between 0.8 and 1.1 per cent in real terms.
Japan's central bank also revised its estimate of inflation downward and expects the Consumer Price Index, which doesn't include fresh food prices, to be between -0.7 and -0.3 per cent in the current financial year, far from the 2 per cent annual inflation target fixed by the institution.
"For the time being, the Bank will closely monitor the impact of COVID-19 and will not hesitate to take additional easing measures if necessary, and also it expects short- and long-term policy interest rates to remain at their present or lower levels," BoJ added.
As of Monday, Japan has reported 13,441 coronavirus cases, with 501 deaths.