By Yoshifumi Takemoto and Tetsushi Kajimoto
TOKYO (Reuters) - The Bank of Japan is ready to take further steps to support the economy in the face of the coronavirus epidemic, Governor Haruhiko Kuroda said after a meeting with Prime Minister Shinzo Abe on Thursday.
The government is working on a new spending package that may include cash payouts to households and subsidies to tourism companies hit by a slump in overseas visitors, according to government officials with direct knowledge of the matter.
The size of the package, to be compiled in April, may range from 10 trillion to 20 trillion yen ($96 billion to $193 billion), funded by government bonds, they said.
"There may be little choice but to issue deficit-covering bonds," to finance the package, one official said on condition of anonymity because of the sensitivity of the matter.
The meeting between Kuroda and Abe - held every few months to exchange views on the economy and markets - came before the BOJ meets next week, when the central bank is expected to ramp up monetary stimulus. They last met in September.
The BOJ would join the Federal Reserve, the Bank of England and, most likely, the European Central Bank. The Fed and the BoE both have cut their benchmark interest rates half a percentage point, and the ECB is all but certain to roll out new stimulus measures when it meets later on Thursday.
Policymakers are working to bolster growth as the coronavirus epidemic attacks their economies, already weakened by trade tensions and slowing global demand.
Kuroda said the BOJ has been providing ample liquidity and stepping up asset purchases in response to recent market moves, which he said were "fluctuating wildly."
"We'll take appropriate steps as necessary in a timely manner, while closely monitoring developments," Kuroda told reporters.
The BOJ has been under pressure to loosen policy at its March 18-19 rate review as slumping stock markets, a spike in the yen and the fallout from the coronavirus epidemic threaten to push the economy into recession.
A survey released on Thursday showed large Japanese manufacturers' business sentiment fell to a near nine-year low in January-March.
The government is expected to cut its assessment of the economy in a monthly report due later this month, sources have told Reuters, highlighting the widening economic damage from the coronavirus.