Bank of Japan ‘Summary of Opinions’ from April’s monetary policy meeting
Summary headlines via Reuters:
- Japan’s economy likely to remain in severe state for time being, downside risks high on prospects for recovery
- short-term slump blamed on pandemic may not necessarily determine medium-, long-term path of Japan’s economy
- Japan’s economy likely to improve, see prices pick up once pandemic subsides
- timing of hitting price goal to be delayed as Japan’s economy may face contraction as sharp as during the great depression in 1930s
- must take steps focused on liquidity provision, also guard against further deterioration in economic conditions
- must closely monitor financial system, keeping in mind risk some japan bank loans could turn sour
- appropriate to change BOJ’s forward guidance to one tied to impact of pandemic as economy already lost momentum to hit price goal
- policymakers must act boldly to avoid repeat of great depression, there is room for more fiscal, monetary policy coordination as Japan faces risk of deflation
- BOJ must re-examine effectiveness of its current policy to prevent japan from slipping back into deflation
- BOJ must guide monetary policy keeping in mind chance pandemic may not subside quickly
- Japan may face ‘reversal rate’ situation earlier than expected if interest rates fall further while financial institutions’ balance sheet becomes eroded by pandemic fallout
