The Bank of Japan will consider extending beyond the end of March its emergency support measures for companies facing financial difficulties amid the coronavirus pandemic, Gov. Haruhiko Kuroda said Wednesday.
“It’s highly possible that we will extend (the program) if we judge it necessary,” Kuroda said at a news conference after an online meeting with corporate managers in Osaka.
Kuroda’s remarks came only hours after he agreed with Prime Minister Yoshihide Suga to maintain close communication and coordination over monetary policy in their first meeting since the premier took office a week ago.
The BOJ’s emergency scheme includes the provision of funds to banks that extend interest-free loans to struggling companies, and purchases of commercial papers and corporate bonds from lenders to ensure ample liquidity.
At a two-day policy meeting last week, BOJ board members agreed to maintain the measures launched this spring when Japan was hit hard by the coronavirus outbreak, along with keeping in place its ultraloose monetary policy.
During the meeting with corporate managers in Osaka, Kuroda reiterated that the BOJ will not hesitate to ease monetary policy further if the economic situation worsens, noting that cooperation with the government on helping firms ride out the virus crisis has been effective.
Financial markets have been looking for any signs of change in the relationship between the BOJ and the government that has been shaped by an agreement made in January 2013.
Suga has promised to stick with his predecessor Shinzo Abe’s “Abenomics” policy mix that entails bold monetary easing by the BOJ, fiscal stimulus and structural reforms to spur growth.
“I agreed with the prime minister that the government and the BOJ will continue to communicate sufficiently and proceed with policies in firm coordination,” Kuroda told reporters at the prime minister’s office after meeting with Suga.
“The government and the BOJ have fulfilled their respective roles, which turned out to be a plus for the economy,” Kuroda said of the 2013 accord. “We will continue to guide our policy based on this view.”
In the accord that was made soon after Abe took office, the BOJ pledged monetary easing in pursuit of a 2 percent inflation target.
Still, the BOJ is far from the inflation target despite years of monetary easing. The consumer price index, excluding volatile fresh foods, fell 0.4 percent in August from a year ago.
Asked by a reporter about the yen’s rise against the U.S. dollar over the weekend, Kuroda said it is preferable that currency moves be stable and reflect fundamental economic conditions.
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