The Bank of Japan is expected to review its COVID-19 business financing aid package at its next monetary policy meeting from Thursday.
Meanwhile, the bank’s nine-member Policy Board is seen keeping intact the policy of guiding short- to long-term rates to very low levels.
The package includes incentives for commercial institutions to extend interest-free unsecured loans to small companies and expanded purchases of corporate bonds and commercial paper in market operations.
“Financial situations are calming down, with large companies steadily repaying debts,” a BOJ executive said.
The central bank is therefore expected to discuss a possible reduction in the bond and CP purchases at the two-day policy meeting.
Meanwhile, the accommodations and restaurant industries are still struggling. The omicron coronavirus strain may make their situations even worse.
This may lead the bank to extend one or more of the measures in the package beyond the current expiration set for the end of March 2022.
The BOJ will make its decision after examining the results of the tankan quarterly business sentiment survey for December this year, due out Monday, and the coronavirus situation, including whether the omicron variant will spread.
The board may delay the decision until it meets again next month.
At this week’s meeting, participants are also expected to discuss how the economy may be affected by higher oil and raw materials prices.
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