Bank of Japan Policy:

 https://mainichi.jp/english/articles/20200917/p2g/00m/0bu/075000c

Article:

TOKYO (Kyodo) -- The Bank of Japan left its ultraloose monetary policy unchanged Thursday to support the economy amid the coronavirus pandemic, with Governor Haruhiko Kuroda expected to announce the central bank will closely cooperate with new prime minister Yoshihide Suga.

At the end of its two-day policy meeting, the central bank maintained short-term interest rates at minus 0.1 percent while guiding long-term rates to around zero percent. It will also continue with measures to facilitate fundraising by struggling companies.

Ideas:

The Bank of Japan's low interest rate policy can have some positive effects and some negative effects.

On the positive side businesses and consumers will be able to get some easy money at lower rates which will then of course is expected to be used in the economy to increased needed economic activity.

At the same time, if banks follow the Bank of Japan's policy suggestions with the low interest rates in might mean they will not profit as much as the want from the low interest rates.

So that of course means they will need to find other ways to make up for the loss of profits from the low interest rates by charging higher fees related to other services they provide.

And its good during the current pandemic that continue to find ways to help struggling companies but at the same time, don't put any pressure on the companies with extra debts burdens which they don't need at this point.

Article:

"Japan's economy has started to pick up with economic activity resuming gradually, although it has remained in a severe situation due to the impact of the novel coronavirus at home and abroad," the BOJ said in a statement.

Under its massive asset-purchasing program, the bank will keep buying government bonds from financial institutions without setting a limit and exchange-traded funds at an annual pace of 12 trillion yen ($114 billion).

Ideas:

Whatever the Bank of Japan can or is wiling to do is good for the Japanese economy as there are many businesses and families who are struggling at the this time.

This is not the time to say let the market decide the winners and loser or let the market decide who will survive and who will not.

These are unprecedented times and its good for central banks and governments to do as much as they can to help those in need.

There is nothing wrong with some Keynesian economics or strategies when the market can't help itself. 

The Japanese economy most likely is going to remain in a severe situation for a long time as the pandemic doesn't appear to be ending anytime soon.

Article:

The BOJ maintained support measures for corporate finance, including providing cheap funds to banks that extend interest rate-free loans to struggling companies under a government program and buying up to 20 trillion yen in corporate bonds and commercial papers from lenders to ensure ample liquidity in the banking system.

Suga launched his Cabinet on Wednesday, inheriting former Prime Minister Shinzo Abe's "Abenomics" policy mix of monetary and fiscal stimulus and structural reforms.

The BOJ had joined Abe's efforts to beat chronic deflation in Japan, introducing unprecedented monetary easing programs to lift the country's inflation rate to 2 percent, the goal that the bank has failed to achieve for more than seven years.

Ideas:

If the BOJ does provide support measures and if the banks follow through with actually giving cheap funds also to the companies that need them then its a good thing which helps struggling companies.

But if some banks decide to not provide the cheap funds but add on some other fees to cover cost or help with the banks profits it defeats the purpose of what the BOJ is trying do to.

But the important idea, as stated, it ensure an amble supply of liquidity in the economy for struggling companies and struggling families too. 

At the present time deflation might be the least of the BOJ's worries, as there are too many companies and families that are just trying to survive.

The BOJ should focus on the 2.0 inflation target at a latter date, as consumer demand at this point most likely is just too low to see any kind of inflation increase.

But at the same time, the only way there might be an increase in inflation is from the supply side, for example if supply prices begin to increase too fast and suppliers will eventually have to decide how much of their costs to they "pass on" those along the chain.

But as consumer demand and maybe business demand is not too good, most likely suppliers are not going to pass on the costs just yet and take a wait and see approach.

And then there is the possibility of the increase in energy costs which could effects businesses, car owners, and families and energy costs will increase such as electricity, heating oil, and so on.

Have a nice day and be safe!