In line with market forecasts, the Japanese central bank (BOJ) has decided to stay with its current monetary policy of -0.10% and the target of 10-year government bond yields around 0%.
The BOJ has also agreed to extend the deadline for its corporate financing package which should end in March 2021, up to 6 months.
Meanwhile, through a published statement, the central bank will also conduct an examination of a more effective and sustainable monetary easing framework to achieve the 2% inflation target.
Therefore, investors need to be prepared with the results of their inspections carried out with various measures at its police meeting in March next year.
Under the emergency funding facility, the BOJ has offered to buy up to 20 trillion yen in corporate bonds and commercial papers as well as provide interest-free funds of 120 trillion yen for up to 1 year to commercial banks that lend to businesses and households.
As of late November, the BOJ had provided funds of 51.5 trillion yen to commercial banks.
Meanwhile, Prime Minister Yoshihide Suga, on Tuesday, launched the third fiscal stimulus plan for the current fiscal year of 73.6 trillion yen.
The BOJ has partnered with the government in efforts to support the economy, providing 0.1% interest rates to banks that lend to small businesses under the national loan guarantee scheme.
Following the BOJ decision, the Japanese yen recorded a depreciation against the USD and was also influenced by investors who wanted to take advantage.
