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Statement on Monetary Policy

June 16, 2020
Bank of Japan

  1. At the Monetary Policy Meeting held today, the Policy Board of the Bank of Japan decided upon the following.
    1. (1) Yield curve control

      The Bank decided, by an 8-1 majority vote, to set the following guideline for market operations for the intermeeting period. [Note 1]

      The short-term policy interest rate:
      The Bank will apply a negative interest rate of minus 0.1 percent to the Policy-Rate Balances in current accounts held by financial institutions at the Bank.
      The long-term interest rate:
      The Bank will purchase a necessary amount of Japanese government bonds (JGBs) without setting an upper limit so that 10-year JGB yields will remain at around zero percent. While doing so, the yields may move upward and downward to some extent mainly depending on developments in economic activity and prices. 1
    2. (2) Guidelines for asset purchases

      With regard to asset purchases other than JGB purchases, the Bank decided, by a unanimous vote, to set the following guidelines.

      1. a) The Bank will actively purchase exchange-traded funds (ETFs) and Japan real estate investment trusts (J-REITs) for the time being so that their amounts outstanding will increase at annual paces with the upper limit of about 12 trillion yen and about 180 billion yen, respectively. 2
      2. b) As for CP and corporate bonds, the Bank will maintain their amounts outstanding at about 2 trillion yen and about 3 trillion yen, respectively. In addition, until the end of March 2021, it will conduct additional purchases with the upper limit of the amounts outstanding of 7.5 trillion yen for each asset.
  2. 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. In this situation, exports and industrial production have declined substantially. Corporate profits and business sentiment have deteriorated, and the deceleration in the pace of increase in business fixed investment has become evident. 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. Housing investment has declined moderately. Meanwhile, public investment has increased moderately. Financial conditions have been accommodative on the whole but less so in terms of corporate financing, as seen in deterioration in firms' financial positions. On the price front, the year-on-year rate of change in the consumer price index (CPI, all items less fresh food) is at around 0 percent, mainly affected by the decline in crude oil prices. As for inflation expectations, relatively weak indicators have been observed.
  3. With regard to the outlook, 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 year-on-year rate of change in the CPI (all items less fresh food) is likely to be negative for the time being, mainly affected by COVID-19 and the decline in crude oil prices. Thereafter, with the economy improving, the rate of change is expected to turn positive and then increase gradually.
  4. With regard to risks to the outlook, there have been extremely high uncertainties over the consequences of COVID-19 and the magnitude of their impact on domestic and overseas economies. In addition, it is necessary to pay close attention to whether, while the impact of COVID-19 remains, firms' and households' medium- to long-term growth expectations will not decline substantially and the smooth functioning of financial intermediation will be ensured with financial system stability being maintained.
  5. The Bank will continue with "Quantitative and Qualitative Monetary Easing (QQE) with Yield Curve Control," aiming to achieve the price stability target of 2 percent, as long as it is necessary for maintaining that target in a stable manner. It will continue expanding the monetary base until the year-on-year rate of increase in the observed CPI (all items less fresh food) exceeds 2 percent and stays above the target in a stable manner.
    The Bank will continue to support financing mainly of firms and maintain stability in financial markets through (1) the Special Program to Support Financing in Response to the Novel Coronavirus (COVID-19), (2) an ample provision of yen and foreign currency funds without setting upper limits mainly by purchasing JGBs and conducting the U.S. dollar funds-supplying operations, and (3) active purchases of ETFs and J-REITs.
    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. [Note 2]

  1. [Note 1] Voting for the action: Mr. KURODA Haruhiko, Mr. AMAMIYA Masayoshi, Mr. WAKATABE Masazumi, Mr. FUNO Yukitoshi, Mr. SAKURAI Makoto, Ms. MASAI Takako, Mr. SUZUKI Hitoshi, and Mr. ADACHI Seiji. Voting against the action: Mr. KATAOKA Goushi. Mr. Kataoka dissented, considering that it was desirable to further strengthen monetary easing by lowering short- and long-term interest rates, in response to a possible increase in downward pressure on prices and with the aim of alleviating firms' and households' interest burden. Return to text
  2. [Note 2] Mr. Kataoka dissented, considering that, given the severe impact of COVID-19, further coordination of fiscal and monetary policy was necessary and it was appropriate for the Bank to revise the forward guidance for the policy rates to relate it to the price stability target. Return to text

  1. In case of a rapid increase in the yields, the Bank will purchase JGBs promptly and appropriately. Return to text
  2. As for the guideline for purchases of ETFs and J-REITs, in principle, "the Bank will purchase these assets so that their amounts outstanding will increase at annual paces of about 6 trillion yen and about 90 billion yen, respectively. With a view to lowering risk premia of asset prices in an appropriate manner, the Bank may increase or decrease the amount of purchases depending on market conditions." Return to text

(Reference)

Meeting hours:
Monday, June 15: 14:00-15:11
Tuesday, June 16: 9:00-11:26
Policy Board members present:
Mr. KURODA Haruhiko, Chairman (Governor)
Mr. AMAMIYA Masayoshi (Deputy Governor)
Mr. WAKATABE Masazumi (Deputy Governor)
Mr. FUNO Yukitoshi
Mr. SAKURAI Makoto
Ms. MASAI Takako
Mr. SUZUKI Hitoshi
Mr. KATAOKA Goushi
Mr. ADACHI Seiji

(Others present)

June 15
From the Ministry of Finance:
Mr. KANDA Masato, Deputy Vice-Minister for Policy Planning and Coordination (14:00-15:11)
From the Cabinet Office:
Mr. TAWA Hiroshi, Vice-Minister for Policy Coordination (14:00-15:11)
June 16
From the Ministry of Finance:
Mr. TOYAMA Kiyohiko, State Minister of Finance (9:00-11:09, 11:19-11:26)
From the Cabinet Office:
Mr. TAWA Hiroshi, Vice-Minister for Policy Coordination (9:00-11:09, 11:19-11:26)
Release dates and times:
Statement on Monetary Policy -- Tuesday, June 16 at 11:33
Summary of Opinions -- Wednesday, June 24 at 8:50
Minutes of the Monetary Policy Meeting -- Monday, July 20 at 8:50