May 22, 2020 / 1:27 AM / 16 days ago

Bank of Japan launches new loan scheme, extends deadline for virus-combating steps by six months

FILE PHOTO: A businessman walks near the Bank of Japan (BOJ) headquarters in Tokyo, Japan, in this February 15, 2016 file photo. REUTERS/Thomas Peter/Files

TOKYO (Reuters) - The Bank of Japan decided on Friday to launch a new lending facility that aims to channel more funds to small and midsize businesses suffering from the economic blow of the coronavirus pandemic.

In an emergency policy meeting, the central bank also extended the deadline for a series of measures it has deployed to combat the virus fallout, including accelerated corporate debt buying, by six months to March 2021.

As widely expected, the BOJ kept monetary settings unchanged including its short-term interest rate target of -0.1% and a pledge to guide the 10-year government bond yield around 0%.

BOJ Governor Haruhiko Kuroda will not hold a news conference, the central bank said.

The BOJ eased monetary policy for the second straight month in April by ramping up risky asset buying and pledging to buy unlimited amounts of government bonds to combat the pandemic.

Kuroda had instructed his staff last month to work on the new lending facility that targets smaller businesses hit by the health crisis.

In an outline of the scheme released in April, the BOJ had said the new facility would offer zero-interest loans to financial institutions that boost lending to small firms by tapping government guarantee programmes. It also offered to pay 0.1% interest to lenders that boost such loans.

Reporting by Leika Kihara and Tetsushi Kajimoto; Editing by Chang-Ran Kim

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