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Home » BOJ to launch new scheme for fighting climate change, keeps policy steady

BOJ to launch new scheme for fighting climate change, keeps policy steady

BOJ to launch new scheme for fighting climate change, keeps policy steady

TOKYO, June 18 (Reuters) - The Bank of Japan surprised markets on Friday by unveiling a plan to boost funding for fighting climate change, joining a growing number of central banks stepping up efforts to address its economic and financial fallout.

The central bank also maintained its massive stimulus to support the economy and extended a September deadline for its pandemic-relief programme, suggesting that Japan will lag well behind the United States in ending crisis-mode policies.

"In Japan, inflation had not reached 2% even before the pandemic. As such, we must continue with our ultra-loose monetary policy even after the pandemic subsides, in order to achieve our 2% inflation target," BOJ Governor Haruhiko Kuroda told a briefing after the policy decision.

The BOJ said it will launch the climate change scheme by the end of this year, and will release a preliminary outline of its plan at its next policy-setting meeting in July.

Under the scheme, the BOJ will provide funds to financial institutions that increase loans and investment for activities aimed at combating climate change.

While details have yet to be announced, the BOJ said it will be modeled after a similar programme that offers cheap loans to financial institutions that boost lending in areas considered to be growth industries. read more

"The BOJ probably wanted to move in tandem with the government, which recently flagged steps to promote green in its policy blueprint," said Naomi Muguruma, senior market economist at Mitsubishi UFJ Morgan Stanley Securities.

"It is also jumping on the band-wagon of the rising tide among central banks towards linking monetary policy to climate change," she said.

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