December 1, 2021
Bank of Japan
Economic Activity, Prices,
and Monetary Policy in Japan
Speech at a Meeting with Local Leaders in Oita
ADACHI Seiji
Member of the Policy Board
I. Economic Activity and Prices
A. Economic Activity
1. Developments regarding the novel coronavirus (COVID-19)
I would like to begin my speech by talking about developments regarding COVID-19.
The number of confirmed new cases of COVID-19 continues to move up and down within
each country and region and varies considerably across them. It has decreased to a low level
on the whole from summer 2021. Currently, new cases are resurging significantly in European
countries as well as Russia, and are also rising in the United States. On the other hand, the
status of infections for most of Asia and Latin America is relatively moderate (Chart 1).
Meanwhile, although some
emerging economies are falling behind in vaccinations, full
vaccination rates are high in many advanced economies. The significant global drop in severe
cases and confirmed deaths can be regarded as a positive sign.
The number of new cases in Japan is seeing great improvement, as evidenced by the weekly
average declining to a considerable extent recently after soaring well above 22,000 persons
in mid-August.
That said, the situation warrants careful attention, as concern over the spread of a new variant
is increasing at the moment.
2. Recent developments in economic activity at home and abroad
Although the COVID-19 situation continues to entail uncertainties, economic activity has
started to show signs of change, including the positive sign that I just mentioned. In what
follows, I would like to point to three key factors that I consider as common in recent global
economic conditions, including those in Japan.
The first is the bottoming-out of and pick-up in services consumption. In the past when the
number of confirmed new cases increased, firms in numerous industries within face-to-face
services -- such as eating and drinking, accommodations, and entertainment -- were forced to
virtually suspend their business operations in many countries and regions given the
implementation of public health measures to constrain people's movement. However, mainly
owing to the progress with vaccinations, firms in these industries have in many cases resumed
their business activities and business conditions have started to pick up accordingly (Chart 2).
Although this is a positive development for the economy, there are high uncertainties over
the course of COVID-19 and it would be overly optimistic to expect that services
consumption would promptly return to the pre-pandemic level. In fact, Japan has not yet
experienced "revenge spending" -- which describes a situation where consumption that was
curbed during the pandemic shoots up, triggered by a resumption in economic activity --
although this was anticipated.
The second factor is firms' active stance toward fixed investment. The global spread of
COVID-19 has brought great change to household and corporate behavior, including working
style. This change has created firms' new demand for fixed investment, particularly for digital
transformation (DX). Moreover, there is a possibility that firms' demand for fixed investment
to achieve carbon neutrality will also widely expand, partly due to an increased global
awareness of climate change issues, as suggested by the fact that scientific achievements
related to climate change won the 2021 Nobel Prize in Physics.
In the case of Japan, business fixed investment has picked up to date (Chart 3). If demand for
it remains firm, this will likely provide business opportunities for the manufacturing industry,
which has displayed strong international competitiveness in capital goods, and in turn
contribute to expanding firms' exports and production. Meanwhile, the Bank of Japan will
persistently continue with powerful monetary easing under the current framework of
Quantitative and Qualitative Monetary Easing (QQE) with Yield Curve Control, with a view
to achieving the 2 percent price stability target. This could also be a factor that will support
new demand for business fixed investment.
The two factors I have described so far are encouraging developments for the global economy.
I will next focus on a point that may be a matter of concern in considering future economic
conditions, and therefore this should continue to warrant careful attention.
The third factor is the effects of supply-side constraints in the economy. Since 2020, the global
economy including Japan has faced various supply-side constraints (Chart 4). Since around
the second half of fiscal 2020, the shortage of semiconductors for automobiles has become a
major issue. With a plunge in automobile sales at the start of the COVID-19 pandemic,
semiconductor manufacturers worldwide curbed their production of automotive
semiconductors, which are considered to generate relatively narrow profit margins. However,
demand for automobiles in fact surged unexpectedly thereafter, mainly due to people's
behavioral changes during the pandemic to avoid close-contact settings as much as possible.
This consequently gave rise to the supply shortage of automotive semiconductors. After the
turn of 2021, this shortage grew further, partly affected by natural disasters and a fire accident
at a semiconductor factory in Japan. Then, through the summer, although the supply shortage
that stemmed from the adverse incidents I just mentioned was being alleviated, the surge in
COVID-19 cases in Southeast Asian countries in particular caused factory shutdowns; thus,
production not only of semiconductors but also of other automobile-related parts was
suspended, resulting in the materialization of other types of supply-side constraints. The
constraints not only have been seen in the automobile industry but also have begun to feed
into the industries of other products, such as white goods, and this in turn has pushed down
firms' exports and production (Charts 5 and 6). Indeed, it was the unexpected surge in demand
that severely tightened the supply-side constraints; however, the contributing factors to the
constraints are complex, including the stagnation of maritime logistics that stemmed from the
malfunctioning of ports due to the spread of COVID-19 among longshore workers. Moreover,
it appears to me that there are growing uncertainties regarding prospects for the removal of
supply-side constraints, as they depend on the future course of COVID-19. For now, I
maintain the view that these supply-side constraints are temporary; that said, I will carefully
monitor future developments.
B. Prices
1. Price developments abroad
Let me now turn to prices.
Inflation rates in the United States and European countries have been kept above 2 percent,
the level at which their central banks aim (Chart 7). These upswings in inflation rates seem
to be largely attributable to the increase in energy prices such as for crude oil and natural gas,
in addition to the global supply-side constraints, which I just explained. Moreover,
particularly in the United States, those who had been temporarily out of the labor market
following the outbreak of COVID-19 have been returning at a slower pace than expected;
therefore, labor supply has been lagging behind increased labor demand, and this in turn has
been increasing the upward pressure on wages.
Nevertheless, regarding these rises in inflation rates in the United States and European
countries, the current dominant view among their respective authorities is that, in terms of
both the demand and supply sides, the rises reflect temporary factors associated with the
pandemic, and thus the high inflation rates are quite unlikely to feed into medium- to long-
term inflationary pressure, such as an increase in medium- to long-term inflation expectations.
2. Price developments in Japan and their outlook
The inflation rate in Japan remains at a low level of around 0 percent, as evidenced by the
fact that the year-on-year rate of increase in the consumer price index (CPI) for all items less
fresh food for October 2021 -- the latest month for which data are available -- was 0.1 percent.
This is largely a reflection of such factors as the reduction in mobile phone charges in April.
When excluding these temporary effects, the rate of increase would rise to around 1.5 percent,
and its pace has accelerated recently, mainly due to the rise in energy prices (Chart 8).
Prior to the pandemic, I personally had a cautious view regarding the outlook for prices in
Japan. To elaborate, although Japan's economy was no longer in deflation, I believed that the
inflation rate would hover around 0 percent, as a considerable amount of deflationary pressure
remained. However, I now think that there is a higher probability that the inflation rate will
increase, based on the following factors.
The first is the change in firms' price-setting behavior. Amid the pandemic, firms, especially
those in the consumption-related services industry, have faced a rapid and large-scale decline
in demand. However, it appears that they have not engaged in intense price competition,
unlike in the past when they were met with a large decline in demand. Instead, firms have
lowered prices only marginally or left them unchanged. One reason for this could be that
corporate managers have judged that price discounts will not lead to increased sales, given
that the decline in demand this time is due to the implementation of public health measures,
which is an artificial factor, and to people's vigilance against COVID-19. On the policy front,
it is also possible that (1) various government subsidies as well as effectively interest-free
and unsecured loans and (2) the Bank's measures to support corporate financing, such as the
Special Funds-Supplying Operations to Facilitate Financing in Response to the Novel
Coronavirus (COVID-19) -- hereafter, the COVID-19 Special Operations -- have helped
firms uphold their businesses, giving incentive for them to avoid intense price competition.
Furthermore, now that the COVID-19 situation has started to calm down, firms are gradually
beginning to raise the prices of their goods and services. Some anecdotes suggest that the
pandemic has motivated an increasing number of firms, especially those in the consumption-
related industry, to change their "low-margin, high-turnover" business models -- which were
quite common in the past -- taking into account structural changes in customer needs. These
firms have become oriented toward engaging in business with high added value and wide
margins, and have even increased their sales. The examples I have highlighted seem to
indicate a change in firms' price-setting behavior.
The second factor, although this overlaps with what I pointed to earlier as one factor
affecting
is the improvement in firms' growth prospects backed by their
global economic activity,
active stance toward fixed investment. When viewed in the context of the capital stock cycle,
I am under the impression that firms have started to take an active stance toward fixed
investment, along with upward revisions of their earnings projections, or, in more technical
terms, the expected growth rates (Chart 9). The fact that firms have come to take a positive
view of their business conditions suggests that a virtuous cycle from profits to fixed
investment is starting to operate, where they aim to achieve higher profitability by raising the
prices of their goods and services. The higher margins earned by firms through price rises
could lead to wage increases and are expected to serve as a great catalyst for achieving the 2
percent price stability target.
The third factor is the possibility of future energy prices remaining high. Increasing energy
prices have contributed significantly to the recent rises in inflation rates abroad. Likewise,
higher energy prices account for about half of the recent rise in Japan's inflation rate,
excluding factors such as the effects of the reduction in mobile phone charges. Future
developments in energy prices entail uncertainties; there may be a reversal in such prices at
some point, causing the inflation rate to decline. However, I believe that the possibility of the
increase in energy prices continuing for a relatively long period cannot be ruled out, unlike
in the past. This is due to the urge to shift to using
alternative energy, reflecting global efforts
to address climate change risks.
Major countries are working to commit to significant reductions in carbon dioxide emissions
in order to address
climate change risks. Against this background, countries share a common
understanding of the need to globally switch energy sources from fossil fuels such as oil and
coal to alternative energy, such as solar power, wind power, hydropower, and geothermal
power. In the past when demand for crude oil grew, the rise in energy prices was controlled
as crude oil supply increased. At present, however, with the trend of seeking alternative
energy, crude oil supply is limited and fails to meet the demand; as a result, energy prices
have been rising to date. Such developments are likely to persist for a long period.
Meanwhile, medium- to long-term inflation expectations in Japan have picked up and are
likely to follow an uptrend (Chart 10).
3. Keys to assessing price developments in the post-COVID-19 era
As I just described, there is a possibility that the inflation rate in Japan will increase. For
inflation to be favorable to the vast majority of people in Japan, I think that an increase in
wage inflation will be necessary. At present, unfortunately, indications of such an increase
have not been seen clearly. Nevertheless, I am paying close attention to the possibility of
behavioral changes within firms and households drawn from the experience of the pandemic
altering people's price perception, thereby changing firms' wage setting in a way that could
lead to wage increases.
Although COVID-19 will subside eventually, it is difficult for the time being to imagine the
virus being eradicated. While vaccinations are expected to have a reasonable effect, the face-
to-face services industry in particular -- such as eating and drinking, accommodations, and
entertainment -- may need to continue to bear significant costs related to infection control,
considering that living with COVID-19 is unavoidable. In addition, given the increasingly
aging population in Japan, one possibility is that consumption of high value-added goods and
services, even at high prices, will drive overall private consumption. To provide such high
value-added goods and services, I believe that firms may start to pay higher wages to their
employees. With these factors in mind, I consider the post-COVID-19 phase to be a great
opportunity for firms, particularly those in the services industry, to raise sales prices and
hence their employees' wages.
C. Exchange Rate Impact on Prices
I would now like to say a few words about the exchange rate impact, mainly on prices, which
has become a hot topic in the media lately.
Recently, regarding the notion that the yen's depreciation will lead to a rising inflation rate in
Japan, some voices in the media have pointed out the risk of stagflation due to "unhealthy"
yen depreciation, while others say that the Bank should urgently revise its monetary policy
to stop developments from moving in that direction.
The precise definition of stagflation varies among economists, but it is generally taken to
refer to the phenomenon in which a sustained rise in inflation and a deterioration in an
economy occur simultaneously. Based on the medians of the Policy Board members' forecasts
for Japan's economy and inflation -- as shown in the Bank's Outlook for Economic Activity and
Prices (Outlook Report) released on October 28, 2021 -- the real GDP growth rate is projected
to be 3.4 percent for fiscal 2021, 2.9 percent for fiscal 2022, and 1.3 percent for fiscal 2023.
The year-on-year rate of increase in the CPI (less fresh food) is projected to be 0.0 percent in
fiscal 2021, shifting to 0.9 percent in fiscal 2022 and 1.0 percent in fiscal 2023. Given this
outlook, I think that the economy is far from stagflation, both now and down the road. This
is a completely different situation from the first oil crisis, when real GDP experienced
negative growth and consumer prices recorded a year-on-year increase of over 20 percent.
I will refrain from commenting specifically on exchange rate levels. In general, though, the
effects of a weaker yen on Japan's economy are determined by the interaction of a range of
factors, and thus they can change depending on developments in economic activity and prices
at home and abroad at the time. Having said that, I do not believe that recent exchange rate
movements indicate a situation of "unhealthy" yen depreciation that could lead to stagflation.
In fact, I see the yen's recent depreciation as having some positive aspects for Japan; it is
supporting business fixed investment by contributing to the increase in profits of Japanese
firms' overseas subsidiaries and to Japanese exporters' bottom lines. It is also encouraging
overseas firms to consider establishing a corporate presence in Japan, such as by building
manufacturing facilities.
In my view, the yen exchange rate has been moving within a relatively narrow range over the
medium to long term (Chart 11). From the perspective of interest rate parity theory, it can also
be said that the yen exchange rate has stayed within a relatively narrow range given that
market participants do not expect yield differentials between the yen and currencies in the
United States and European countries to expand significantly. Many central banks, including
the Bank of Japan, have not set exchange rate levels as a monetary policy target, but rather
conduct monetary policy to aim at a target level of 2 percent inflation so as to achieve price
stability. The fact that major advanced economies are all aiming at the 2 percent target level
may be one of the factors that are stabilizing exchange rates.
II. Monetary Policy
The Bank of Japan will persistently continue with accommodative monetary policy until the
2 percent price stability target is achieved (Chart 12).
As responses to COVID-19, the Bank, in cooperation with the government, has taken
measures to shore up the economy since 2020. The government has promoted credit
guarantees as well as effectively interest-free and unsecured loans to support financial
institutions in extending credit, while the Bank has conducted the COVID-19 Special
Operations, among other measures. Thanks in part to all these measures, firms' financial
conditions remain accommodative on the whole so far. Although some firms are facing tight
financing, the number of corporate bankruptcies has been at an extremely low level. I believe
that the Bank's policy responses, coupled with those by the government, have been effective
in propping up the economy.
The Bank will be deliberating on the treatment of the COVID-19 Special Operations from
April 2022 onward while carefully assessing the COVID-19 situation and its impact on
corporate financing.
With that said, I would like to touch on some issues that I think warrant attention with regard
to the Bank's policy responses to the pandemic.
First, I would like to underscore that, for the time being, the Bank will closely monitor the
impact of COVID-19 and will not hesitate to take additional easing measures if necessary,
with a view to supporting firms' ability to sustain their businesses. If the number of COVID-
19 cases resurges and it once again becomes inevitable to have public health measures in
place, for example, it could become necessary to support corporate financing. The role of the
COVID-19 Special Operations largely depends on developments relative to the pandemic, so
it is necessary to assess such developments and their impact on corporate financing when
deliberating on the next steps.
Meanwhile, I am aware that there is a view among experts regarding the so-called zombie firm
argument, which suggests that the life of firms that had low profitability and carried a high risk
of future default even before the pandemic might be artificially extended. If such a situation
materialized, there is concern that this would inhibit industrial restructuring and the startup of
new businesses, which in turn would hinder economic revitalization, particularly in regional
economies. Regarding the number of corporate bankruptcies since the outbreak of the pandemic
in 2020, while it is favorable that it has stayed at a historically low level, I also consider it
important for new businesses to rise in areas where growth can be expected. Furthermore, in
terms of the financial system, I think that attention needs to be paid to whether or not corporate
debt accumulated during the pandemic will turn into non-performing loans down the road,
emerging as a risk to the financial system. This is a key management issue for regional financial
institutions as well. I believe that these institutions, which have operating bases that are closely
connected with the region, have a particularly critical role in terms of discerning the financial
soundness of borrower firms. If the issue is to revitalize underperforming firms, the role of
corporate restructuring funds and other private-sector funds will also be crucial.
Thank you.
Economic Activity, Prices,
and Monetary Policy in Japan
Speech at a Meeting with Local Leaders in Oita
December 1, 2021
ADACHI Seiji
Member of the Policy Board
Bank of Japan
Chart 1
Confirmed New Cases of COVID-19
Overseas Japan
ten thous. persons
40
thous. persons thous. persons
United States
25 5.5
35
Europe
5.0
Confirmed new cases
India
(per day, left scale)
4.5
30
Latin America 20
Severe cases (right scale)
Other emerging economies 4.0
25
3.5
15
3.0
20
2.5
15 10
2.0
1.5
10
5
1.0
5
0.5
0 0.0
0
Feb-21 Apr-21 Jun-21 Aug-21 Oct-21
1-Feb-20 1-Aug-20 1-Feb-21 1-Aug-21
Notes: 1. In the left panel, figures for the United States, Taiwan, and Hong Kong are from the Centers for Disease Control and Prevention (CDC), the Taiwan Ministry
of Health and Welfare, and the Hong Kong Centre for Health Protection, Department of Health, respectively. All other figures are from the World Health
Organization (WHO). Figures for Europe are the sum of figures for the European Union and the United Kingdom. Figures for Latin America are the sum of figures
for the major economies in the region. Figures for other emerging economies are the sum of figures for South Africa, Russia, Turkey, and the major economies in
the NIEs, ASEAN, and the Middle East. Figures show 7-day backward moving averages.
2. In the right panel, figures for confirmed new cases are weekly averages. Figures for severe cases are those at the end of the week.
Sources: CEIC; Ministry of Health, Labour and Welfare.
Chart 2
Business Conditions of the Services Industry
at Home and Abroad
Business Conditions in Japan PMIs for the United States and the Euro Area
DI ("favorable" - "unfavorable"), % points
s.a., DI
40
80
70
20
60
0
50
-20
40
-40
United States
30
-60
Services for individuals Euro area
20
-80
Accommodations, eating & drinking services
10
-100
CY 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21
Note: Figures are for enterprises of all sizes from the Tankan (Short-Term Economic Note: Figures are based on the Services Business Activity Index.
Survey of Enterprises in Japan). Source: IHS Markit (© and database right IHS Markit Ltd 2021. All rights
Source: Bank of Japan. reserved.).
Chart 3
Business Fixed Investment
s.a., ann., tril. yen s.a., CY 2015=100
100 160
Private nonresidential investment Domestic shipments and imports of
150
(SNA, real, left scale) capital goods (right scale)
95
Private construction completed
140
(nonresidential, real, right scale)
90
130
120
85
110
80
100
90
75
80
70
70
65 60
06 08 10 12 14 16 18 20
CY
Notes: 1. Figures for 2021/Q3 are July-August averages.
2. Figures for real private construction completed are based on Bank staff calculations using the construction cost deflators.
Sources: Cabinet Office; Ministry of Economy, Trade and Industry (METI); Ministry of Land, Infrastructure, Transport and Tourism.
Chart 4
Supply-Side Constraints
Suppliers' Delivery Times PMI
s.a., DI
60
50
40
30
Global
United States
20
Euro area
Longer delivery times
10
Jan-19 Jul-19 Jan-20 Jul-20 Jan-21 Jul-21
Note: The suppliers' delivery times PMI is the suppliers' delivery times index in the Manufacturing PMI.
Figures for the global economy are the J.P.Morgan Global Manufacturing PMI.
Source: IHS Markit (© and database right IHS Markit Ltd 2021. All rights reserved.).
Chart 5
World Trade Volume
s.a., CY 2010=100
140
130
120
110
100
90
80
CY
06 08 10 12 14 16 18 20
Note: Figures are for world real imports. The figure for 2021/Q3 is the July-August average.
Source: CPB Netherlands Bureau for Economic Policy Analysis.
Chart 6
Industrial Production
s.a., CY 2015=100
120
110
100
90
80
CY 06 08 10 12 14 16 18 20
Source: METI.
Chart 7
Price Developments at Home and Abroad
Japan United States
y/y % chg. y/y % chg.
6 6
Energy <7%>
Temporary factors
5 5
Services <66%>
Energy <7%>
Goods <28%>
4
4
Services <50%>
CPI <100%>
3 Goods <40%> 3
CPI (less fresh food) <100%>
2
2
1
1
0
0
-1
-1
-2
-2
-3
-3
CY 16 17 18 19 20 21
CY
16 17 18 19 20 21
Euro Area
y/y % chg.
6
Energy <10%>
5
Services <45%>
4
Goods <45%>
3
HICP <100%>
2
Notes: 1. Figures for services include administered prices.
2. Figures for temporary factors for Japan are Bank staff estimates and consist of
1
the effects of the consumption tax hike, free education policies, the "Go To
0
Travel" campaign, and mobile phone charges.
3. Figures in angular brackets show the share of each component.
-1
Sources: Ministry of Internal Affairs and Communications; Haver.
-2
-3
16 17 18 19 20 21
CY
Chart 8
CPI for All Items Less Fresh Food
y/y % chg.
2
1
0
Mobile phone charges
Effects of the "Go To Travel"
-1
campaign
Effects of the consumption tax hike and
free education policies
Energy
-2
Excluding the above factors
CPI (less fresh food)
-3
CY 16 17 18 19 20 21
Notes: 1. Figures for energy consist of those for petroleum products, electricity, as well as manufactured and piped gas charges.
2. Figures for the "effects of the consumption tax hike and free education policies" from April 2020 onward are Bank staff estimates and include the
effects of measures such as free higher education introduced in April 2020.
Source: Ministry of Internal Affairs and Communications.
Chart 9
Capital Stock Cycles and Expected Growth Rates
business fixed investment, y/y % chg.
10
Investment-capital
stock ratio at the
05
end of FY 2020
13
5 11 04
03 15
14
17
12
10
06
18
1.5%
FY 2021
0
07
19
16
1%
-5
08
0.5%
20
09
-10
0%
Expected
growth rate: -2%
-1%
-15
9.5 10.0 10.5 11.0 11.5 12.0 12.5 13.0
investment-capital stock ratio at the end of the previous fiscal year, %
Note: Each broken line represents the combination of the rate of change in business fixed investment and the investment-capital stock ratio at a
certain expected growth rate. The figure for fiscal 2021 is that for 2021/Q2.
Source: Cabinet Office.
Chart 10
Inflation Expectations
y/y % chg.
3.0
Long-term (5 to 10 years ahead)
2.5 Medium-term (3 to 4 years ahead)
2.0
1.5
1.0
0.5
0.0
CY 90 92 94 96 98 00 02 04 06 08 10 12 14 16 18 20 21
Note: Figures are simple averages of the estimated inflation expectations for their respective horizons.
Sources: Bank of Japan Working Paper Series, no.19-E-6; Bank of Japan Research Laboratory Series, no.21-E-1; Bloomberg; Consensus Economics, "Consensus Forecasts";
QUICK, "QUICK Monthly Market Survey <Bonds>," "QUICK Tankan"; Japan Center for Economic Research; Wolters Kluwer, "Blue Chip Economic Indicators";
Cabinet Office; Ministry of Finance; Ministry of Internal Affairs and Communications; Bank of Japan.
Chart 11
Exchange Rates
monthly avg., inverted, yen monthly avg., CY 2010=100
70 120
Yen appreciation
80
110
Yen depreciation
90
100
100
90
110
80
120
U.S. dollar/yen (left scale) 70
130
Nominal effective exchange rate of the yen (right scale)
140 60
08 09 10 11 12 13 14 15 16 17 18 19 20 21
CY
Sources: BIS; Bank of Japan.
Chart 12
Further Effective and Sustainable Monetary Easing: Policy Actions
To achieve the price stability target of 2 percent, the Bank will (1) continue with monetary easing in a sustainable
manner and (2) make nimble and effective responses without hesitationto counter changes in the situation.
<Interest Scheme to Promote Lending>
Conduct of Yield Curve Control
Establishment of the Interest Scheme to Promote
 Apply incentives (linked to the short-term policy interest
(see the box on the right)
Lending
rate) to financial institutions' current account balances,
corresponding to the amount outstanding of funds provided
Clarification of the range of fluctuations in long-term
through fund-provisioning measures to promote lending
interest rates
― Migate the impact on financial instuons' profits at the me
Expect long-term interest rates to move within the range of
of rate cuts depending on the amount of lending
around ±0.25% from the target level
― The applied interest rates and the eligible fund-provisioning
measures for each category will be changed as necessary at
Introduction of "fixed-rate purchase operations for
MPMs depending on the situation.
consecutive days"
<Decision at the March 2021 MPM>
Strengthen the fixed-rate purchase operations, which stop a
significant rise in interest rates
Applied interest rate
Eligible fund-provisioning measure
Conduct for the time being
• Special Operations in Response to
0.2%
Category
Prioritize stabilizing the entire yield curve at a low level under COVID-19, when funds are provided
Higher than the rate
against loans made by financial
the continuing impact of COVID-19 in particular
I
for Category II
institutions on their own
•
Special Operations in Response to
ETF and J-REIT Purchases 0.1%
COVID-19, when funds are provided
Category
Absolute value of the
against loans other than those for
Purchase as necessary with upper limits* on the
short-term policy
II
Category I and against private debt
annual paces of increase, and maintain these limits interest rate
pledged as collateral
even after COVID-19 subsides
0% • Loan Support Program
Category
* ETFs: about 12 tril. yen J-REITs: about 180 bil. yen
• Operation to Support Financial
Lower than the rate for
III
Institutions in Disaster Areas
Category II
Purchase only ETFs tracking the Tokyo Stock Price
⇒
Enable the Bank to cut short- and long-term interest rates more
Index (TOPIX) nimbly while considering the impact on the functioning of
financial intermediation
In addition, adjustments to the Complementary Deposit Facility
Financial System and Bank Examination Dept. staff
will be made to narrow the gap between the actual Policy-Rate
will make a briefing at the MPMs when the Outlook
Balances and the "hypothetical" Policy-Rate Balances.
Report is decided (four times a year).