Bank of Japan holds rates steady, expands lending packages to $1 trillion to aid struggling firms

After a series of rate cuts to cushion the economic impact of the pandemic crisis, the Bank of Japan held its rates steady on Tuesday to signal that the easing efforts made were enough to support growth.

But the BOJ announced a welcome development for cash-strapped firms as the previously $700 billion worth of lending package for them was expanded to $1 trillion.

Despite remaining focused on easing corporate funding strains, BOJ Governor Haruhiko Kuroda hinted on the central bank’s steps to deal with long-term economic issues including fostering growth and inflation as soon as the pandemic crisis starts to cool down.

As expected, the BOJ retained its yield curve control targets at 0% for long-term interest rates and -0.1% for short-term interest rates.

The BOJ, however, assured the public that it remains open to possibilities of cutting lending rates when the need arises.

The BOJ introduced several monetary easing efforts in March and April. Prime Minister Shinzo Abe lifted the national health emergency in May, but economists believe that the Japanese economy contracted in the current quarter.