* Policy decision expected 0300-0500 GMT
* Board to keep yield targets unchanged
* No major tweaks expected to new lending schemes
* BOJ may point to initial signs economy bottoming out
* Governor Kuroda to brief media 0630 GMT
By Leika Kihara
TOKYO, June 16 (Reuters) - The Bank of Japan is expected to keep monetary settings steady at its policy meeting on Tuesday, as it gauges the effects of stimulus steps already announced to support its economy emerging from coronavirus restrictions.
While the BOJ remains focused on steps to ease corporate funding strains, Governor Haruhiko Kuroda may offer hints on how it will deal with longer-term issues such as how to fire up growth and inflation when the pandemic begins to subside.
“The BOJ probably wants to first look at the economic impact of fiscal spending to be rolled out in July and its massive bond buying to keep the yield curve low,” said Hiroshi Ugai, chief Japan economist at JPMorgan Securities.
“Once it has a better understanding on the state of Japan’s economy, the BOJ may look into the idea of strengthening forward guidance as early as this autumn,” he said.
At its two-day meeting ending on Tuesday, the BOJ is widely expected to maintain its yield curve control targets at -0.1% for short-term and 0% for long-term interest rates.
The central bank is also seen making no major changes to its crisis-response tools, including a 75-trillion-yen ($700 billion) lending facility aimed at channeling funds to firms.
Due to the way it is designed, the size of the lending scheme could exceed 100 trillion yen if more loans are taken out via government programmes. The BOJ may give details on the loan amount to clarify the scale of money pumped out to the economy, sources say.
At his post-meeting briefing, Kuroda may also indicate that the economy has bottomed out, as businesses reopen after the lifting of a nationwide lockdown.
But he is likely to stress the central bank’s resolve to keep flooding markets with cash to help the economy battle the risk of rising bankruptcies and a second wave of infections.
Prime Minister Shinzo Abe declared a state of emergency in April, requesting businesses to close and citizens to stay home, a move that dealt a severe blow to consumption.
The emergency was lifted in late May, but analysts expect GDP contracted more than an annualised 20% in the current quarter, after having slipped into recession in January-March.
$1 = 107.1900 yen Editing by Jacqueline Wong