BOJ to take steps contributing to continuation of powerful easing

Reuters reports the following headlines on the Bank of Japan’s (BOJ) economic assessment.

To take steps contributing to continuation of powerful easing.

To expand eligible collateral for BOJ's provision of credit.

Inflation likely to gradually accelerate toward 2 pct.

It will take longer than intended to achieve 2 pct inflation.

Decided to clarify resolve to continue powerful easing taking into account impact of sales tax hike, uncertainty over overseas economies.

To maintain powerful easing to support improvements in output gap while ensuring economic, financial stability.

Pace of improvement in prices, inflation expectations has remained slow compared to improvements in economy, job market.

Medium-, long-term inflation expectations likely to rise gradually.

Risks to price outlook skewed to downside.

Risks to economic outlook skewed to downside.

Economy's momentum for hitting price goal sustained but lacking strength.

Japan's economy expanding moderately though overseas slowdown affecting exports, output.

Medium- to long-term inflation expectations have been more or less unchanged.

No sign so far of excessively bullish expectations in asset markets, financial institutions' activities.

Prolonged downward pressure on financial institutions' profits from low rates could destabilise financial system.

Risk of financial system destabilising not big for now as financial institutions have sufficient capital bases.

BOJ will relax terms and conditions for securities lending facility.

Will consider introduction of ETF lending facility.

ETF lending facility would make it possible to temporarily lend ETFs to market participants.

BOJ Forecasts:

Median core CPI forecast for fiscal 2020/21 at +1.4% vs. 1.5% in Jan.

Median core CPI forecast for fiscal 2019/20 at +1.1% vs. 1.1% in Jan.

Median real GDP forecast for fiscal 2020/21 at +0.9 % vs. +1.0% projected in Jan.

Median real GDP forecast for fiscal 2019/20 at +0.8% vs. +0.9% projected in Jan.

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