BOJ leaves its monetary policy settings unchanged in June

The Bank of Japan (BOJ) board members decided to keep rates unchanged at -10bps while maintaining a 10yr JGB yield target at 0.00%, at its June monetary policy meeting held this Tuesday.

The Bank's special virus program, however, is likely to increase to around JPY110tln from JPY75 trillion.

Statement summary

Japan's economy is in increasingly severe state.

Economy likely to remain in severe state for time being due to coronavirus pandemic.

Economy likely improve as fallout from coronavirus pandemic subsides.

Will take additional monetary easing steps without hesitation if needed with close eye on impact of coronavirus pandemic.

Size of money pumped out via market operations, lending facilities to combat pandemic likely to increase from current 75 trln yen.

 Size of money pumped out via market operations, lending facilities to combat pandemic likely to increase to around 110 trln yen.

Exports, output falling sharply.

Pace of increase in capex is clearly slowing.

Some weak movements seen in job, income conditions.

Consumption falling sharply.

Consumer inflation hovering around 0%.

Some weak indicators seen in inflation expectations.

Consumer inflation likely to move in negative territory for time being.

There is very strong uncertainty on how pandemic could affect Japan, overseas economies.

Will continue to strive to support corporate funding, stabilize markets.

Market reaction

The Japanese yen shrugs-off the BOJ’s status-quo, as USD/JPY continues to range below 107.50 amid a better market mood.