MNI BRIEF: BOJ Keeps Recovery View; Cuts Exports, Production

The Bank of Japan board on Friday left its overall economic assessment, but lowered its assessment of exports and production due to slowing global growth.

“Japan’s economy, despite being affected by factors such as high commodity prices, has picked up as the resumption of economic activity has progressed while public health has been protected from Covid-19,” the BOJ said in a statement following the completion of a two-day policy meeting. (See MNI BRIEF: BOJ Keeps YCC, Maintains Forward Guidance On Rates)

“Japan’s economy is likely to recover, with the impact of Covid-19 and supply-side constrains waning,” the BOJ said. As foreshadowed by MNI, the BOJ slightly lowered its assessment of exports and industrial production in the wake of slowing overseas economies, saying exports and industrial production have been more or less flat. The previous view was exports and industrial production “have increased as a trend.” (See MNI POLICY: BOJ May Lower Exports, Industrial Production View)

The BOJ maintained a solid view on private consumption, saying “private consumption, despite being affected by price rises, has increased moderately.” It also repeated “inflation expectations have risen.”

The BOJ repeated the risk assessment, saying, “there remain extremely high uncertainties" for Japan's economy, including global growth and inflation, the war in Ukraine, commodity prices, and the impact of Covid-19 at home and abroad. "In this situation, it is necessary to pay due attention to developments in financial and foreign exchange markets and their impact on Japan's economic activity and prices,” the BOJ said.