BoJ: Japan’s economic growth slows down due to prolonged COVID-19 pandemic

BoJ: Japan’s economic growth slows down due to prolonged COVID-19 pandemic

On July 16, the Bank of Japan (BoJ) decided to lower its growth forecast for the country’s economy due to concerns about the lingering effects of the COVID-19 pandemic.

The BoJ maintains its super-loose monetary policy to support the Japanese economy. Photo: Foreign press

During its two-day meeting, the BoJ Policy Council lowered its forecast for Japan’s Gross Domestic Product (GDP) growth in fiscal 2021 (starting from April 2021) to 3.8%, down 0.2 percentage points from the previous forecast, but raised the growth forecast for fiscal 2022 from 2.4% to 2.7%. In addition, the BoJ also raised its forecast for an increase in the core consumer price index (CPI) from 0.1% in the previous forecast to 0.6%.

In the context of the COVID-19 epidemic still raging in Japan and many other countries around the world, the BoJ decided to maintain short-term interest rates at minus 0.1% and 10-year government bond yields in Japan. around 0% to keep lending rates low for companies and households.

Also at the meeting, the BoJ announced the outline of a program to support financial institutions in lending and investing to deal with climate change. Implemented between now and fiscal 2030, the program will follow up on a loan incentive program to support growth that is ending in June 2022.

In the new program, the BOJ will provide zero-interest loans with maturities of up to 1 year to financial institutions, while in the growth-supporting lending program, the BOJ will offer zero-interest loans .1% and up to 4 years for banks to finance projects that contribute to economic growth. To date, the total balance of this growth-supporting loan program has amounted to 7.5 trillion yen ($68 billion).