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BOJ to promote investments, loans to address climate change

Tokyo, June 18 (Jiji Press)–The Bank of Japan said Friday it will introduce a new fund-supply scheme to encourage financial institutions to make investments and loans to address climate change.

 

This scheme, whose outline will be announced when the central bank holds its next policy meeting in July, is expected to be introduced by the end of this year.

 

The new scheme will be based on the existing program that provides low-cost funding to financial institutions working to boost their growth potential.

 

Supporting the private sector’s efforts to tackle climate change “will contribute to stabilizing the macroeconomy in the long run,” the BOJ said in a statement after a two-day policy meeting ended Friday.

 

In taking actions from the monetary policy side, the BOJ deems it important to give consideration to market neutrality, it said.

 

The BOJ extended its corporate financing support measures for the fight against the novel coronavirus pandemic by six months until the end of March 2022.

 

The central bank judged it necessary to continue offering support for the time being as the COVID-19 crisis is likely be prolonged.

 

“Corporate funding will remain under stress,” BOJ Governor Haruhiko Kuroda told a press conference after the meeting. The fallout of the pandemic is expected to linger mainly on hotels, restaurants and bars, he said.

 

Since March last year, when the COVID-19 outbreak became serious in the country, the BOJ has launched a series of measures aimed at supporting corporate financing, including the expansion of corporate bond and commercial paper purchases.

 

These measures, initially set to expire at the end of September 2020, had already been extended twice, each time by six months.

 

In addition, the BOJ kept its current massive monetary easing policy unchanged.

 

The BOJ Policy Board voted seven to one with one abstention to keep its yield curve control targets at minus 0.1 pct for short-term policy interest rates and around zero pct for 10-year government bond yields.

 

The Japanese economy “has picked up as a trend, although it has remained in a severe situation due to the impact of COVID-19 at home and abroad,” the BOJ said in the statement.

 

The central bank said private consumption in Japan “has been stagnant due to strong downward pressure on consumption of services, such as eating and drinking as well as accommodations.”

 

The BOJ said the growth rate of Japan’s core consumer prices is expected to remain at around zero pct for the time being and increase gradually after that on the back of continued improvement in economic activities.

 

Furthermore, the BOJ said it will closely monitor the impact of COVID-19 for the time being and “will not hesitate to take further easing measures if necessary.”

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