BoJ announces first green investment fund
Japan's central bank on Friday announced its first investment fund for efforts to address climate change, as the government works towards its new target of reaching carbon neutrality by 2050.
The scheme, likely to start this year, will be a successor to an existing programme aimed at promoting economic growth more generally, the Bank of Japan said after a twoday policy meeting.
"Climate change issues could exert an extremely large impact on developments in economic activity and prices as well as financial conditions from a medium- to long-term perspective," its policy statement said.
"The bank considers that supporting the private sector's efforts on the issues from a central bank's standpoint will contribute to stabilising the macroeconomy in the long run."
Financial support measures for pandemic-hit businesses were also extended by six months to the end of March 2022, a day after the government approved lifting a virus state of emergency in nine prefectures including Tokyo.
Slightly looser "quasiemergency" restrictions will be set in the capital and six other areas until July 11, less than two weeks before the postponed Tokyo Olympics begin.
The extension of business support had been widely expected, said Naoya Oshikubo, senior economist at SuMi TRUST. "Many companies are continuing to suffer financially from the Covid-19 state of emergency in a number of Japanese prefectures, as well as from the country's low vaccination rates," said Oshikubo ahead of the policy decision.
"The extended financial support package will be very effective in helping hardpressed small and medium sized businesses in Japan as demand for business support loans is high," he added.
Japan's vaccine rollout started comparatively slowly, but has picked up pace in recent weeks. Just over six percent of the population is currently fully vaccinated.
The Bank of Japan left its monetary easing policy unchanged, reiterating that it "will closely monitor the impact of Covid-19 and will not hesitate to take additional easing measures if necessary".
Earlier Friday, official data showed Japan's consumer prices rose slightly in May for the first time in 14 months, largely because of a rebound in energy prices.
Japan has long struggled to hit a two percent inflation target seen as key to kickstarting the world's thirdlargest economy, despite a barrage of stimulus and monetary easing packages.
Yoshiki Shinke, chief economist at Dai-ichi Life Research Institute, said "the BoJ is not in a position to taper its easing policy" as demand in the service sector is still weak owing to the pandemic. Prime Minister Yoshihide Suga in October set a 2050 deadline for Japan to become carbon neutral, significantly firming up the country's climate-change commitments.
The nation has struggled to cut carbon emissions after shutting down reactors in response to the 2011 meltdown at the Fukushima nuclear power plant. Tokyo stocks closed lower on Friday after a day of see-saw trading as investors locked in profits.
The benchmark Nikkei 225 index was down 0.19 percent or 54.25 points to end at 28,964.08, while the broader Topix index fell 0.87 percent or 17.01 points to 1,946.56. "The Nikkei index opened higher after US tech shares gained on the back of drops in long-term interests," said Okasan Online Securities.
"But the Nikkei later struggled to grow as buying of major shares and selling of business-sensitive stocks were competing with each other," it added. The US Fed on Wednesday maintained its highly accommodative monetary policy as expected, but a majority of central bank officials now believe interest rates will increase in 2023, rather than 2024.