Thus, although the yen LIBOR-OIS spread also widened, the rise was relatively marginal compared to the U.S. dollar and euro LIBOR-OIS spreads. Moreover, the effects of monetary easing by the Bank of Japan have recently been gradually spreading and the interest rates in the money market, including those of a longer term, have declined to extremely low levels (see “yen” in Chart 1).
As regards fiscal policies, an ambitious and coordinated fiscal stance remains crucial, as a premature withdrawal of fiscal support would risk delaying the recovery and amplifying the longer-term scarring effects. National fiscal policies should thus continue to provide critical and timely support to firms and households most exposed to the pandemic and the associated containment measures.