Economists surveyed by Bloomberg expect the Bank of Japan (BOJ) to increase the size of its loan program linked to government lending on Tuesday, as Prime Minister Shinzo Abe’s administration announced an expansion of the lending measures last month.
The BOJ, however, is unlikely to refer to the upward revision in the size of the lending program as an expansion of monetary easing. The bank never talked about limiting the size of the program in the first place. The central initially estimated the program’s size at about 30 trillion yen ($280 billion) as part of a 75 trillion yen package of virus-response financing measures.
Markets would look to see if the BOJ changes the size of the program as expected and by how much. A big hike could put upward pressure on the Japanese yen.
The Bank of Japan is expected to leave its main policy levers untouched Tuesday and assess the impact of the various measures taken over the last three months to contain the fallout from the coronavirus-induced lockdown.
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