TOKYO (Reuters) – The Bank of Japan is expected to decide as early as next week to scale back emergency funding support deployed last year to combat a pandemic-induced cash crunch, four sources familiar with its thinking said.
At a two-day rate review ending on Dec. 17, the BOJ is set to maintain ultra-loose monetary policy but debate whether to extend its emergency pandemic-relief programmes beyond the current the March 2022 deadline.
While details are yet to be finalised, the board is leaning toward tapering the BOJ’s corporate bond and commercial paper purchases given sharp improvements in big firms’ funding conditions, the sources said.
Another funding scheme targeting smaller firms may be scaled back, too, though a portion of it could be extended beyond March to keep supporting retailers still reeling from weak consumption, they said.
The decision will be a close call and could be delayed until January if the spread of the Omicron coronavirus variant heightens uncertainty over a fragile economic recovery, they said.
(Reporting by Leika Kihara and Takahiko Wada; Additional reporting by Kentaro Sugiyama; Editing by Sam Holmes)
