March 30, 2021
Bank of Japan
Further Effective and Sustainable Monetary Easing
Speech at the Kisaragi-kai Meeting in Tokyo
(via webcast)
KURODA Haruhiko
Governor of the Bank of Japan
Introduction
It is my great pleasure to have the opportunity today to speak at the Kisaragi-kai meeting.
The global economy has been hit by the extremely large shock of the novel coronavirus
(COVID-19) over the past year. In the first half of last year, it became depressed more
significantly than at the time of the Global Financial Crisis. Fortunately, owing to swift and
aggressive responses made by the governments and central banks around the world, it has
picked up from the bottom. Japan's economy has shown similar developments to those of
the global economy.
That said, COVID-19 has continued to affect economic activity considerably. Due to its
impact, Japan's economic activity and prices are projected to remain under downward
pressure for a prolonged period. The Bank considers it crucial to support the economy under
these circumstances and thereby achieve the price stability target of 2 percent. In doing so,
it is important first of all to address the impact of COVID-19, and since March 2020, the
Bank therefore has been conducting powerful monetary easing to support financing, mainly
of firms, and ensure stability in financial markets. In addition, from a somewhat long-term
perspective, the Bank's challenge is to conduct further effective and sustainable monetary
easing, with a view to achieving the price stability target of 2 percent. To this end, the Bank
conducted an assessment at the latest Monetary Policy Meeting (MPM) and took policy
actions based on the findings. Today, I will first talk about developments in Japan's
economic activity and prices as well as the Bank's responses to the impact of COVID-19.
Then, I will elaborate on the policy actions that have been decided based on the findings of
the latest assessment.
I. Developments in Economic Activity and Prices and the Bank's Policy Responses to
the Impact of COVID-19
Developments in Economic Activity and Prices
Let me start by talking about developments in economic activity and prices.
Japan's economy has picked up as a trend, although it has remained in a severe situation due
to the impact of COVID-19 (Chart 1). Real GDP continued to register positive growth in the
second half of 2020 after hitting bottom in the April-June quarter, when it declined
significantly due to the COVID-19 shock. For the October-December quarter, the level of
real GDP recovered to 2.6 percent lower than the 2019 average. However, since the turn of
2021, downward pressure stemming from the impact of a resurgence of COVID-19 from
last autumn has intensified in the face-to-face services sector, such as eating and drinking as
well as accommodations.
That said, unlike last spring, when economic activity in a wide range of sectors was
constrained, that in sectors other than face-to-face services has been maintained to a large
degree in the current phase, mainly supported by a recovery in world trade and stay-at-home
consumption. Although economic developments are still susceptible to the impact of
COVID-19, a pick-up trend has been maintained.
Japan's economy, with the impact of COVID-19 waning gradually, is likely to follow an
improving trend, albeit moderately, supported by a recovery in external demand,
accommodative financial conditions, and the government's economic measures. The real
GDP growth rate for fiscal 2021, which is starting in a few days, is expected to be clearly
positive, rebounding from the contraction seen in fiscal 2020 and partly due to the effects of
the government's additional economic measures.
The year-on-year rate of change in the consumer price index (CPI) has been negative due to
the impact of COVID-19 and temporary factors that push down prices, such as the past
decline in crude oil prices. That said, when excluding the effects of the temporary factors,
the rate of change has been slightly positive, and price developments have continued to be
firm compared with the degree of deterioration in economic activity. As for the outlook, the
year-on-year rate of change in the CPI is likely to continue to be negative for the time being,
but thereafter it is expected to turn positive and then increase with the effects of temporary
factors that push down prices dissipating and the economy improving.
This is the baseline scenario for the outlook for economic activity and prices, in which risks
remain skewed to the downside. Although the wider vaccination rollout is a positive move,
attention should continue to be paid for the time being to the consequences of COVID-19
and their impact.
The Bank's Policy Responses to the Impact of COVID-19
With COVID-19 affecting the economy, the Bank has conducted powerful monetary easing
since March 2020 through three measures (Chart 2). These measures have been effective in
supporting the economy, mainly through maintaining an accommodative funding
environment. The Bank decided at the December 2020 MPM to extend the duration of the
Special Program to Support Financing in Response to the Novel Coronavirus (COVID-19)
until the end of this September in order to continue to support corporate financing.
Depending on the impact of COVID-19, it also will consider a further extension, as
necessary. The Bank will continue to firmly conduct the current monetary easing measures,
including the Special Program. In addition, it will closely monitor the impact of COVID-19
and will not hesitate to take additional easing measures if necessary.
II. Continuation of Quantitative and Qualitative Monetary Easing (QQE) with Yield
Curve Control
Now, I will talk about the Assessment for Further Effective and Sustainable Monetary
Easing. Under QQE with Yield Curve Control, the Bank has continued to conduct powerful
monetary easing in order to achieve the price stability target of 2 percent. This assessment
started off by examining developments in economic activity and prices under the framework
of QQE with Yield Curve Control as well as its policy effects.
QQE with Yield Curve Control is a monetary policy framework that was introduced in
September 2016 (Chart 3). This framework consists of two major components: yield curve
control and an inflation-overshooting commitment. Yield curve control is a framework for
market operations that targets all interest rates at the short and long ends; in other words, the
yield curve. The Bank aims to control short- and long-term interest rates to the appropriate
levels while taking into consideration both the positive and side effects of monetary easing.
The inflation-overshooting commitment is to continue expanding the monetary base until
the year-on-year rate of increase in the observed CPI exceeds 2 percent and stays above the
target in a stable manner. The key to this commitment is that the Bank promises to continue
with monetary easing based on observed CPI inflation rather than the outlook for CPI
inflation. The Bank aims to strengthen the formation of inflation expectations with this
extremely strong commitment. In addition, through this commitment, it is implementing the
idea of a "makeup strategy," in which monetary easing is conducted so that the inflation rate
stays above the target for a sustained period of time to compensate for the observed
inflation rate that continued to fall below the target. This strategy was examined in this
assessment using an economic model, and the results reconfirmed that it is appropriate to
employ this strategy as the Bank's monetary policy conduct.
Yield curve control and the inflation-overshooting commitment are both indispensable
elements of QQE with Yield Curve Control. With these two components, the main
transmission mechanism is to achieve accommodative financial conditions by maintaining
low real interest rates -- which are calculated by subtracting inflation expectations from
nominal interest rates -- and thereby exert positive effects on economic activity and prices.
Developments in economic activity and prices since QQE with Yield Curve Control was
introduced indicate that it has had positive effects in line with the intended mechanism.
Nominal interest rates in Japan have been kept at extremely low levels through yield curve
control. With inflation expectations being higher than those prior to the introduction of
QQE, real interest rates have been clearly negative. The low real interest rates have
improved financial conditions, mainly through a decline in funding costs as well as
favorable conditions in financial and capital markets (Chart 4). In fact, bank lending and the
aggregate amount outstanding of CP and corporate bonds have continued to increase. In
financial and capital markets, foreign exchange rates have been stable on the whole and
stock prices have been on an uptrend. As a result, these developments have pushed up
economic activity, and corporate profits and the employment situation have improved. The
output gap, which shows the balance between aggregate demand and supply, turned clearly
to excess demand in 2017 and then expanded within positive territory. In this situation,
wages have increased moderately, as seen in the fact that base pay -- which did not rise
during the period of deflation -- has increased for seven consecutive years, and underlying
inflation has taken hold in positive territory.
An analysis using an economic model shows that QQE with Yield Curve Control has been
effective in pushing up economic activity and prices (Chart 5). The Bank carried out
simulations to compare actual developments in real GDP and the CPI with simulated
developments obtained assuming that the Bank's powerful monetary easing had not been
introduced. The simulation results show that actual figures are higher than the
counterfactual estimates; on average, the level of real GDP is between around 0.9 and 1.3
percent higher and the year-on-year rate of change in the CPI is between around 0.6 and 0.7
percentage points higher. This suggests that monetary easing has had positive effects to
those extents on economic activity and prices.
In addition, on the back of improved economic activity and tightened labor market
conditions under QQE with Yield Curve Control, important changes have occurred, in that
labor force participation of women and seniors has increased and firms have improved their
labor productivity. These changes are desirable for Japan, which faces the problem of a
declining population and the need to increase productivity in the economy as a whole. With
economic developments continuing to be favorable, positive moves toward addressing the
medium- to long-term challenges facing Japan's economy have been observed.
That said, the situation where inflation rates do not rise easily has continued. The main
reason is that the mechanism of adaptive inflation expectations formation in Japan is
complex and sticky. On this point, the Bank conducted several analyses in the latest
assessment, and the results suggest that the formation of inflation expectations in Japan is
deeply affected by not only the observed inflation rate at the time but also past experiences
and the norms developed in the process. In other words, changing people's mindset and
behavior based on the assumption that prices will not increase easily, which have become
deeply entrenched because of the experience of prolonged deflation, will take time.
However, this also suggests the high possibility that when people actually experience
prolonged inflation, this likely will be gradually incorporated into the assumption on which
their mindset is based.
Based on the explanation so far, with a view to achieving the price stability target of 2
percent, it is appropriate for the Bank to continue with QQE with Yield Curve Control,
which has been effective in pushing up economic activity and prices. To this end, the Bank
judged it important to take the following basic stance on monetary policy: (1) to continue
with monetary easing in a sustainable manner and (2) to make nimble and effective
responses without hesitation to counter changes in developments in economic activity and
prices, as well as in financial conditions. Combining these two approaches is essential to
continuing with monetary easing for a long time and to enhancing its effectiveness. With
this in mind, at the March MPM, the Bank conducted an assessment of various policy
measures and decided upon policy actions based on the findings. I will now explain this in
detail.
III. Policy Actions to Conduct Further Effective and Sustainable Monetary Easing
The Bank has decided to take three major policy actions (Chart 6).
Establishment of the Interest Scheme to Promote Lending
First is the establishment of the Interest Scheme to Promote Lending. This scheme enables
the Bank to cut short- and long-term interest rates nimbly without hesitation while
considering the impact on the functioning of financial intermediation. Cutting those rates is
an important option as a nimble and effective additional easing measure. That said, it seems
that fewer market participants expect interest rate cuts as an additional easing measure
option because of the impact on the functioning of financial intermediation. Thus, the Bank
decided to set up in advance a scheme that takes into account this impact at the time of rate
cuts, thereby enhancing the effectiveness of the additional easing measure of short- and
long-term interest rate cuts.
Through the Interest Scheme to Promote Lending, the Bank applies certain interest rates as
an incentive to financial institutions' current account balances, corresponding to the amount
outstanding of funds that the Bank has been providing through its various fund-provisioning
measures to promote financial institutions' lending, and the incentives will be raised when
the short-term policy interest rate is lowered. This scheme can mitigate the impact on
financial institutions' profits to a certain degree at the time of rate cuts depending on the
amount of their lending.
The applied interest rates, or the incentives, are categorized into three groups. In one
category, the rate is the absolute value of the short-term policy interest rate. Since the
short-term policy interest rate is currently minus 0.1 percent, a positive interest rate of 0.1
percent is applied for this category. The rates higher and lower than said category are
applied respectively to the other two categories; they are set at 0.2 percent and 0 percent at
the moment. Under the scheme, the Bank also classifies its fund-provisioning measures into
these three categories, or in other words, "boxes," in accordance with the purpose of the
measures. It has been decided that the highest interest rate of 0.2 percent will be applied to
funds provided through the Special Funds-Supplying Operations to Facilitate Financing in
Response to the Novel Coronavirus (COVID-19) against loans that financial institutions
make on their own. The aim is to further actively provide support to financial institutions to
make loans, mainly to small and medium-sized firms, in response to COVID-19 at their
own risk. An interest rate of 0.1 percent is applied to funds provided through the Special
Funds-Supplying Operations to Facilitate Financing in Response to the Novel Coronavirus
(COVID-19) against loans other than those that financial institutions make on their own and
against private debt pledged as collateral, and 0 percent to funds provided through the Loan
Support Program and the Funds-Supplying Operation to Support Financial Institutions in
Disaster Areas. The list of fund-provisioning measures eligible for each category, or "box,"
will be changed at the MPMs as necessary depending on the situation.
This scheme enables the effects of monetary easing to further permeate the economy by
promoting financial institutions' lending under a negative interest rate. When short- and
long-term interest rates are lowered as an additional easing measure, the applied interest
rates on a portion of financial institutions' current account balances will be raised through
this scheme and their lending thereby will be promoted further. In this way, the scheme will
play a complementary role for the additional easing effects.
In addition, the latest policy actions include technical adjustments to the method to calculate
the portion of financial institutions' current account balances at the Bank to which a
negative interest rate is applied. I will not go into details today, but these adjustments also
will contribute to further smooth conduct of the negative interest rate policy and to
enhancing the effectiveness of the additional easing measure of cutting short-term interest
rates.
Conduct of Yield Curve Control
The second policy action is with regard to the conduct of yield curve control. The Bank
made clear at the latest MPM that the range of fluctuations in long-term interest rates, or
10-year JGB yields, will be between around plus and minus 0.25 percent from the target
level, which is set at "around zero percent."
The effects of yield curve control on the functioning of the JGB market are, in a sense, an
inevitable consequence of maintaining interest rates stably at extremely low levels. That
said, in order to conduct yield curve control sustainably, it is important to strike a balance
between maintaining market functioning and appropriately controlling interest rates. In fact,
the examination made in the assessment reconfirmed that fluctuations within a certain range
have positive effects on the functioning of the JGB market without impairing the effects of
monetary easing.
When the framework for continuous powerful monetary easing was strengthened in July
2018, the Bank announced that it would allow long-term interest rates to move upward and
downward in about double the range, which was previously between around plus and minus
0.1 percent from the target level. Thereafter, the range of fluctuations in long-term interest
rates widened and the functioning of the JGB market improved. However, since then, there
have been times when the range of actual fluctuations has become narrow. Given these
developments and the findings of the assessment, the Bank at the latest MPM judged it
appropriate to make clear its thinking on the range of long-term interest rate fluctuations.
In order to secure the effects of monetary easing while conducting yield curve control
flexibly during normal times, it is necessary to firmly stop a significant rise in interest rates
if such a rise happens. Thus, the Bank decided at the latest MPM to further strengthen the
fixed-rate purchase operations, through which it purchases an unlimited amount of JGBs
with certain maturities at fixed rates. That is, "fixed-rate purchase operations for
consecutive days" have been introduced, through which the fixed-rate purchase operations
will be conducted consecutively for a certain period of time. Through this new operation,
the Bank can set, when necessary, an upper limit on interest rates more powerfully than
before. On the other hand, when interest rates temporarily fall below the lower limit in
day-to-day movements, the Bank will not strictly respond to such developments because
they will not impair the effects of monetary easing.
This is the basic thinking on the conduct of yield curve control and the policy actions that
have been decided at the latest MPM. That said, under the continuing impact of COVID-19
in particular, it is important to stabilize the entire yield curve at a low level. Thus, for the
time being, the Bank will conduct yield curve control with priority on such stabilization.
Exchange-Traded Fund (ETF) and Japan Real Estate Investment Trust (J-REIT)
Purchases
The third policy action concerns ETF and J-REIT purchases. These purchases aim at
exerting positive effects on economic activity and prices by lowering risk premia in the
markets. In the latest assessment, the Bank found that large-scale purchases of ETFs during
times of heightened market instability are effective in terms of containing risk premia.
Given this finding, the sustainability and nimbleness of ETF and J-REIT purchases can be
enhanced by conducting them more flexibly in a prioritized manner.
In order to realize such purchases, the Bank decided at the latest MPM to revise the
guideline for ETF and J-REIT purchases. Specifically, it decided to maintain the upper
limits on annual paces of increase in the amounts outstanding of ETFs and J-REITs at about
12 trillion yen and about 180 billion yen, respectively, even after COVID-19 subsides,
although these limits were decided in March last year as a temporary measure in response to
the impact of COVID-19. With these upper limits, the Bank will conduct purchases as
necessary while taking into account market conditions.
Moreover, in order to avoid the Bank's indirect shareholding ratio from rising in some
particular ETF component firms, the Bank decided at the latest MPM to only purchase
ETFs tracking the Tokyo Stock Price Index (TOPIX), which is an index with the largest
number of component stocks. The Bank has been addressing the issue of a rising indirect
shareholding ratio to date by increasing the share of purchases of ETFs tracking the TOPIX,
and thus the latest decision is an extension of such increase.
Further Attention to the Financial System
In addition to these three policy actions, given that monetary easing is expected to be
continued for a long time, it has been decided that staff of the Financial System and Bank
Examination Department, which is in charge of monitoring developments in the financial
system, will attend the meeting and explain those developments to the Policy Board at the
Outlook for Economic Activity and Prices
MPMs when the is decided. While the Bank has
been examining risks of financial imbalances in the conduct of monetary policy, it will pay
further attention to developments in the financial system.
Conclusion
I have talked about the Bank's policy actions decided lately in view of conducting further
effective and sustainable monetary easing. Through these actions, the sustainability and
nimbleness of the respective measures that comprise QQE with Yield Curve Control have
been enhanced and the framework itself has been strengthened further, accordingly. These
actions will enable the Bank to pursue monetary easing more strongly than before.
The Bank has continued with large-scale monetary easing since the introduction of QQE in
2013. In this situation, with economic activity improving significantly, wages have
increased moderately and the economy is no longer in deflation. The Bank considers that it
is possible to achieve the price stability target of 2 percent by continuing with monetary
easing, although it has been taking time. The sustainability and nimbleness of QQE with
Yield Curve Control has been enhanced through the latest policy actions. In addition, the
effectiveness of the inflation-overshooting commitment has been confirmed in the
assessment. Under the current framework, the Bank will carry out its mandate of achieving
the price stability target of 2 percent by continuing to persistently conduct powerful
monetary easing.
Thank you very much for your attention.
Further Effective and Sustainable Monetary Easing
Speech at the Kisaragi-kai Meeting in Tokyo
(via webcast)
March 30, 2021
KURODA Haruhiko
Governor of the Bank of Japan
Introduction
I. Developments in Economic Activity and Prices
and the Bank's Policy Responses to the Impact of
COVID-19
II. Continuation of Quantitative and Qualitative
Monetary Easing (QQE) with Yield Curve Control
III. Policy Actions to Conduct Further Effective and
Sustainable Monetary Easing
Conclusion
Chart 1
I. Developments in Economic Activity and Prices and the Bank's Policy Responses to the Impact of COVID-19
Recent Developments in Economic Activity and Prices
Pace of Economic Recovery Consumer Price Index
Economic Activity by Sector
(Real GDP, Level) (CPI)
s.a., CY 2019 average = 100 s.a., CY 2019 = 100 y/y % chg.
102 110
4
Effects of the "Go To Travel"
campaign
100
100 Effects of the consumption tax
3 hikes and free education policies
-5.2% -2.6%
-10.0% Energy
90
98
Excluding the effects of the
2
above temporary factors
80
CPI (less fresh food)
96
70 1
94
Manufacturing
60
Accommodations,
0
eating and
drinking services
92
50
Services for
amusement and
hobbies
-1
90
40
Transport
Nonmanufacturing
88 30 -2
20/Q1 Q2 Q3 Q4 Jan. Jul. Jan. Jul. Jan. CY 14 15 16 17 18 19 20 21
July July
19 20 21
Notes: 1. In the middle chart, figures for manufacturing are the "Indices of Industrial Production" and those for other sectors are the "Indices of Tertiary Industry Activity."
Figures for nonmanufacturing exclude accommodations, eating and drinking services, services for amusement and hobbies, and transport.
2. In the right-hand chart, energy consists of petroleum products, electricity, and gas, manufactured & piped. Figures for "effects of the consumption tax hikes and free education
policies" from April 2020 onward are based on staff estimations and include the effects of measures such as free higher education introduced in April 2020.
1
Sources: Cabinet Office; Ministry of Economy, Trade and Industry; Ministry of Internal Affairs and Communications; Bank of Japan.
Chart 2
I. Developments in Economic Activity and Prices and the Bank's Policy Responses to the Impact of COVID-19
The Bank's Measures in Response to COVID-19
Supporting Corporate Financing
Special Program to Support Financing in Response to COVID-19
Purchases of CP and corporate bonds: amount outstanding of about 20 tril. yen at maximum (previous
amount outstanding of about 5 tril. yen)
Special Funds-Supplying Operations to Facilitate Financing in Response to COVID-19
Stabilizing Financial Markets
Ample and Flexible Provision of Yen and Foreign Currency Funds
Further active purchases of JGBs and T-Bills
Enhancement of the U.S. Dollar Funds-Supplying Operations
Purchases of ETFs and J-REITs
ETFs: annual pace with an upper limit of about 12 tril. yen
J-REITs: annual pace with an upper limit of about 180 bil. yen
Chart 3
II. Continuation of QQE with Yield Curve Control
QQE with Yield Curve Control
Yield Curve Control Inflation-Overshooting Commitment
%
1.0
0.8
"The Bank will continue expanding the
monetary base until the year-on-year rate of
Target level of the
0.6
long-term interest rate:
increase in the observed CPI (all items less
around zero percent
fresh food) exceeds the price stability target
0.4
of 2 percent and stays above the target in a
Short-term policy stable manner."
0.2
interest rate:
minus 0.1 percent
"Achieving the price stability target means
attaining a situation where the inflation rate
0.0
is 2 percent on average over the business
cycle."
-0.2
Source: Bank of Japan, policy statement (Sept. 2016 MPM)
Recent
-0.4
-0.6
0 1 2 3 4 5 6 7 8 9 10 15 20 30 40
residual maturity, year
Sources: Bank of Japan; Bloomberg.
3
Chart 4
II. Continuation of QQE with Yield Curve Control
Economic and Financial Developments
since the Introduction of QQE with Yield Curve Control
Amounts Outstanding of Bank Lending, Foreign Exchange Rate and Stock Prices
CP, and Corporate Bonds
y/y % chg.
yen/U.S. dollar
< I > < II > < III > thous.yen
16
150 35
Amount outstanding of bank lending
Yen/U.S. dollar (left scale)
12
30
130
Amount outstanding of CP and
Nikkei 225 (right scale)
8
25
corporate bonds 110
4
20
90
0
15
70
-4
10
-8 50 5
CY 07 09 11 13 15 17 19 21 CY 07 09 11 13 15 17 19 21
Output Gap and Unemployment Rate Wages
%
y/y % chg.
%
4 6
5
Base pay increase
4
2 5
Scheduled cash earnings
3
(full-time employees)
0 4
Hourly scheduled cash earnings
2
(part-time employees)
-2 3
1
Output gap (left scale)
-4 2
0
Unemployment rate (right scale)
-6 1 -1
Chart 5
II. Continuation of QQE with Yield Curve Control
Examination on Policy Effects
 The Bank conducted an analysis using a macroeconomic model to estimate simulated
developments in real GDP and the CPI assuming QQE had not been introduced. The differences
between the counterfactual figures (A to E) and actual figures are regarded as the policy effects.
Real GDP (Level) CPI (y/y chg.)
y/y % chg.
s.a., tril. yen
580 2.0
1.5
560
1.0
540
0.5
520 0.0
-0.5
500
Actual A B
Actual A B
-1.0
480
-1.5
C D E C D E
460 -2.0
CY 08 09 10 11 12 13 14 15 16 17 18 19 20 CY 08 09 10 11 12 13 14 15 16 17 18 19 20
Policy Effects (Average since the Introduction of QQE)
A B C D E A B C D E
CPI y/y chg.
Real GDP Level
(less fresh food and
(rate of deviation between
+1.3 +1.2 +1.0 +0.9 +1.0 energy, deviation between +0.7 +0.6 +0.6 +0.6 +0.6
counterfactual and actual
counterfactual and actual
figures, %)
figures, % points)
Note: Five types of counterfactual figures (A to E) were estimated based on different counterfactual paths of economic activity and prices. For details of simulations, see Appendix 2 in
the Assessment for Further Effective and Sustainable Monetary Easing released in March 2021.
5
Sources: Cabinet Office; Ministry of Internal Affairs and Communications, etc.
Chart 6
III. Policy Actions to Conduct Further Effective and Sustainable Monetary Easing
Policy Actions to Conduct
Further Effective and Sustainable Monetary Easing
Aim: Further Effective and Sustainable Monetary Easing
"enhancing sustainability of monetary easing"
& "nimble responses to counter changes in the situation"
<Interest Scheme to Promote Lending>
1. Establishment of the Interest Scheme
to Promote Lending  Apply incentives (linked to the short-term policy interest
rate) to financial institutions' (FIs') current account balances,
 Enable the Bank to cut short- and long-term interest
corresponding to the amount outstanding of funds provided
rates more nimbly while considering the impact on
through fund-provisioning measures to promote lending
the functioning of financial intermediation
― Mitigate the impact on FIs' profits at the time of rate cuts
depending on the amount of lending
― The applied interest rates and the eligible fund-provisioning
2. Clarification of the range of fluctuations
measures for each category will be changed as necessary at
in long-term interest rates (±0.25%)
MPMs depending on the situation.
 Strike a balance between securing effects of
<Decision at the March 2021 MPM>
monetary easing and maintaining market functioning
 Introduction of "fixed-rate purchase operations for
Applied interest rate Eligible fund-provisioning measure
consecutive days"
• Special Operations in Response
0.2%
Category
to COVID-19, when funds are
Higher than the rate
3. New guideline for ETF and J-REIT provided against loans made by
I
for Category II
FIs on their own
purchases
• Special Operations in Response
0.1%
 Purchase ETFs and J-REITs as necessary with upper limits
to COVID-19, when funds are
Category
of about 12 tril. yen and about 180 bil. yen, respectively, on Absolute value of the
provided against loans other than
short-term policy
annual paces of increase in their amounts outstanding
II
those for Category I and against
interest rate
(abolish the guideline for purchasing these assets, in
private debt pledged as collateral
principle, at annual paces of increase in their amount
0%
• Loan Support Program
outstanding of about 6 tril. yen and about 90 bil. yen,
Category
Lower than the rate • Operation to Support FIs in
respectively)
III
Disaster Areas
for Category II
 Purchase only ETFs tracking the TOPIX