This photo shows the Bank of Japan headquarters building in Tokyo's Chuo Ward. (Mainichi)

       TOKYO (Kyodo) -- The Bank of Japan on Thursday began a two-day policy meeting to assess economic risks from resurging coronavirus cases in Japan and map out its funding program in support of tackling climate change.

       The BOJ is widely expected to maintain its ultraloose monetary policy as the Japanese economy remains on shaky ground with a fourth state of emergency over COVID-19 declared for Tokyo and the Olympics from July 23 set to take place under it.

       A week after the European Central Bank said it will factor climate change considerations into monetary policy, the BOJ is scheduled to announce an outline of its new program to provide funds to financial institutions for their loans and investments related to climate change.

       To varying degrees, major central banks including the Bank of England and the U.S. Federal Reserve are focusing more on climate change as momentum is building globally toward decarbonization to fight global warming.

       BOJ Governor Haruhiko Kuroda has warned that climate change will have an "extremely large" impact on the economy over the longer term.

       The BOJ, however, may not share the kinds of inflation concerns raised in the United States and some European nations where progress in COVID-19 vaccinations has led to increased economic activity.

       Still, rising raw material costs have raised concerns that they will squeeze profits at Japanese firms at a time when sluggish consumption makes it difficult to raise product prices.

       The BOJ has taken the view that the economy remains in a "severe" situation due to the pandemic but has picked up as a trend. Its fresh quarterly economic and price outlook report is due out on Friday.

       The Japanese central bank is expected to maintain its program to keep borrowing costs low by setting short-term interest rates at minus 0.1 percent while guiding 10-year Japanese government bond yields at around zero percent.

       Recent data have shown the recovery is more evident among manufacturers than nonmanufacturers, especially restaurants, bars and hotel operators. Economists say further progress in the country's vaccine rollout is a key factor in resuming more economic activity.

       Japan's economy is expected to grow 4.0 percent in the current business year through next March and core consumer prices, a key gauge of inflation, are projected to rise 0.1 percent from a year earlier, far from the BOJ's target of 2 percent, according to the most recent outlook report.

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