TOKYO • The Bank of Japan (BOJ) yesterday ramped up its emergency monetary easing and cut growth forecasts for the world's third-largest economy, as the coronavirus pandemic ravages the globe.
After a meeting, shortened from two days to one, the central bank said it would shift to unlimited government 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 fallout from the virus.
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.
Analysts said the announcement was appropriate but were gloomy on the prospects of success.
The move is "largely symbolic, but it's better than doing nothing", NLI Research Institute senior economist Taro Saito told Agence France-Presse 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 (S$1.06 trillion) cap on government bond buying, the BOJ's purchases were well below the ceiling, Mr Saito noted.
In a quarterly economic report issued yesterday, the bank also revised down growth forecasts for the world's third-largest economy.
For the current fiscal year to next March, it now forecasts that the economy will shrink 3 to 5 per cent, compared with the previous estimate of 0.8 to 1.1 per cent growth.
For the past year to last month, the BOJ estimates the economy shrank 0.1 per cent to 0.4 per cent, compared with the previously estimated 0.8 to 0.9 per cent growth.
But it revised up the forecast for fiscal year to March 2022, now estimating growth of 2.8 to 3.9 per cent, against a previous estimate of 1.0 to 1.3 per cent expansion.
"Japan's economy has been in an increasingly severe situation due to the impact of the spread of the novel coronavirus at home and abroad," the bank said in a statement.
"Financial conditions have been less accommodative in terms of corporate financing, as seen in deterioration in firms' financial positions."
It said its "current powerful monetary easing measures... will contribute to supporting economic and financial activities", along with measures taken by governments at home and abroad to tackle the pandemic.
The central bank left rates unchanged and also reiterated its longstanding commitment to a 2 per cent inflation target.
But it revised down its forecast for core consumer prices, which exclude fresh food, now estimating that the fiscal year to next March will see the prices falling between 0.3 per cent and 0.7 per cent on-year, against rises of 1.0 to 1.1 per cent in the previous estimate.