HAKODATE, Hokkaido (Bloomberg) The Bank of Japan will end its unprecedented credit programs in a way that is least disruptive to investors, BOJ Deputy Gov. Hirohide Yamaguchi said Wednesday.
"The bank will, without any predetermined view, carefully assess developments in corporate financing and financial markets," Yamaguchi said in Hakodate. "It is important to plan an exit in a way that market participants can anticipate and not bring about unnecessary market disturbances."
The BOJ last week decided to extend the credit-support programs of buying corporate debt from banks and providing them with unlimited loans to Dec. 31 from Sept. 30, citing "severe" borrowing conditions amid the recession. Yamaguchi said keeping the "exceptional" measures for too long could distort credit markets.
"Corporate financing conditions, especially for small companies, are still tight," said Junko Nishioka at RBS Securities Japan Ltd. "The decision indicates the bank will continue to stick to an accommodative monetary policy."
We "will decide, at an appropriate timing, whether the support offered by the current measures is still necessary," Yamaguchi said, adding prolonging the programs may hurt the BOJ's balance sheet and such "excessive" intervention could create large swings in the economy and prices.