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BOJ Cuts Growth Forecast, Unveils Climate Scheme Plan

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TOKYO Reuters The Bank of Japan cut this fiscal years growth forecast on Friday but maintained its view the economy was headed for a moderate recovery, a sign monetary policy will be in a holding pattern for some time.

The BOJ also released an outline of its new scheme aimed at boosting funding for activities combating climate change, which will offer banks longterm loans at zero interest.

The climate scheme will be launched this year and last until fiscal 2030. The BOJ will offer funds to banks that extend green and sustainabilitylinked loans, as well as invest in green bonds and sustainabilitylinked bonds. Transition finance loans will also be applicable for the scheme.

The BOJ said it will not pay any interest incentives to banks that tap the scheme.

In fresh quarterly projections released on Friday, the BOJ said it expects the economy to expand 3.8 in the current fiscal year ending in March 2022, down from 4.0 projected in April.

But it revised up its growth forecast for next fiscal year to 2.7 from 2.4 on expectations that consumption will pick up as vaccinations accelerate.

Japans economy is likely to improve … as the pandemics impact gradually subsides due to progress in vaccinations, the BOJ said in a quarterly report.

But the outlook is highly uncertain as domestic and overseas economies could be swayed by developments regarding the pandemic, it said.

As widely expected, the central bank left its yield curve control YCC target unchanged at 0.1 for…

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