Bank of Japan unveils plan to boost funding to fight climate change, keeps policy steady

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 program, suggesting that Japan will lag well behind the United States in ending crisis-mode policies.

“In Japan, inflation had not reached 2 per cent 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 per cent inflation target,” BOJ Governor Haruhiko Kuroda told a briefing after the policy decision.

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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 program that offers cheap loans to financial institutions that boost lending in areas considered to be growth industries.

Source: The Globe and Mail