Bank of Japan boosts its coronavirus stimulus plan to more than $1 trillion amid 'extremely severe' economic crash

  • The Bank of Japan increased its COVID-19 stimulus from 75 trillion yen ($US700 billion) to 110 trillion yen ($US1.02 trillion) on Tuesday.
  • “Japan’s economy has been in an extremely severe situation due to the impact of the novel coronavirus (COVID-19),” the central bank said.
  • Japan has been one of the least infected major economies from coronavirus, with fewer than 1,000 people dying in the country – less than 1% of the death toll seen in the US.
  • Bank of Japan Governor Haruhiko Kuroda, however, said: “We can’t rule out the risk of a second wave of infections.”
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The Bank of Japan has boosted its coronavirus stimulus plan to more than $US1 trillion but fell short of changing interest rates as the central bank signalled it could put its COVID-19 economic measures in place beyond March 2021.

The Bank of Japan increased its stimulus programme from 75 trillion yen ($US700 billion) to 110 trillion yen ($US1.02 trillion).

The bank’s COVID-19 plan provides zero interest loans to banks if they increase their lending levels to companies. It is intended to prevent a liquidity crunch .

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“We can’t rule out the risk of a second wave of infections,” Governor Haruhiko Kuroda said in a news conference.

The Bank of Japan said in a statement: “Japan’s economy has been in an extremely severe situation due to the impact of the novel coronavirus (COVID-19) at home and abroad. Overseas economies have been depressed significantly, reflecting the impact of the COVID-19 pandemic.

“In this situation, exports and industrial production have declined substantially.”

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Kuroda said such uncertainties could prompt the bank to extend its COVID-19 response tools beyond the deadline of March 2021.

“If the need for our support diminishes, we can ponder an exit. But we are ready to keep these supports in place for quite a long time,” Kuroda said.

As markets expected, the Bank of Japan held its bond yield control targets at -0.1% for short-term interest rates and 0% for long-term rates.

As of Wednesday, Japan has reported 17,507 cases and 934 deaths from coronavirus, make it one of the least infected major economies.

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