Bank of Japan expands easing measures, cuts growth forecast

Apr 27, 2020: The Bank of Japan on Monday ramped up its emergency monetary easing, lifting the cap on its buying of government bonds and increasing purchases of other assets, while cutting its growth forecasts.

After a meeting shortened from two days to one, the central bank said it would shift to unlimited bond buying and more than double its capacity to purchase corporate bonds and commercial papers -- a move to support Japan Inc's financing as the country grapples with the spread of coronavirus.

The announcement comes as central banks around the world revert to extraordinary measures -- in hand with trillions of dollars of government stimulus -- to support their economies, which have been ravaged by long-running lockdowns aimed at preventing the spread of the disease.

The move is "largely symbolic, but it's better than doing nothing", Taro Saito, senior economist at NLI Research Institute, told AFP ahead of the decision.

"Given the circumstances, no one expects the latest policy can turn the economy around, and the same can be said about fiscal stimulus," he said.

Even before lifting the 80 trillion yen cap on government bond buying, the BoJ's purchases were well below the ceiling, Saito noted.

In a quarterly economic report issued on Monday, the bank also revised down growth forecasts for the world's third largest economy.

For the current fiscal year to March 2021, it now forecasts the economy will shrink 3.0-5.0 percent, compared with the previous estimate of 0.8-1.1 percent growth.

For the past year to last month, the BoJ estimates the economy shrank 0.1 percent to 0.4 percent, compared with the previously estimated 0.8-0.9 percent growth.

However, it revised up the forecast for fiscal year to March 2022, now estimating growth of 2.8-3.9 percent, against a previous estimate of 1.0-1.3 percent expansion.

AFP/APP