There wasn’t much anticipation ahead of yesterdays Bank of Japan monetary policy meeting.

The expectation was that the BOJ would continue to add to its COVID-19 stimulus policy measures, in line with global central banks. The BOJ met this expectation by announcing a new lending programme.

This lending programme is essentially an LTRO-type policy worth around 30 trillion Yen.

Loans to commercial banks will be set at zero per cent interest and funds sent to Small – Medium-sized businesses would earn commercial banks only 0.1%. This programme will remain in place until March 2021, the BOJ has now deployed 75 trillion Yen worth of COVID-19 support policies.

Governor Kuroda had already instructed the BOJ to look into additional ways of providing support to the economy, prior to the BOJ meeting.

As a result, the actions of the BOJ do not come as a surprise, this lack of surprise is likely to weigh on USD/JPY prices next week.