The Bank of Japan (BoJ) has announced it will hold an extraordinary meeting on May 22. Economists at MUFG Bank expect the BoJ to announce detailed cashflow support measures directed at SMEs, which have been hit hard by the COVID-19 pandemic. USD/JPY is rising before the meeting, currently at 107.788.
Key quotes
“The incentives of the BoJ’s SME financial support will not produce immediate policy results, given that there are still surplus funds from before, but looking ahead, the measures will start to slowly and steadily exert market pricing support.”
“We do not expect deeper negative interest rates to be a policy option for the BoJ.”
“The BoJ’s expanded corporate financial support is a positive. The measures will likely support both USD/JPY and Japan stocks, even if they do not exert immediate impact. The measures will support higher USD/JPY and Japan stock prices once business operations at Japanese companies normalize.”
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