MNI BRIEF: BOJ Backs Recovery; Upbeat on Exports, Production

The Bank of Japan board maintained its economic assessment after Thursday's monetary policy meeting, saying economic activity had "progressed" and that exports and industrial production continued to recover.

The BOJ also maintained its long-term outlook, saying "Japan’s economy is likely to recover, with the impact of Covid-19 and supply-side constrains waning” after it stood pat on monetary policy (See MNI Brief: BOJ On Hold, Keeps Forward Guidance).

The Bank upgraded its assessment for exports and industrial production as they continue to recover from a period of weakness earlier this year.

“Exports and industrial production have increased as a trend, with the effects of supply-side constrains waning,” the BOJ said.

The BOJ also tweaked its assessment of private consumption, saying it had increased "moderately" despite being affected by Covid-19.

The assessment of inflation expectations repeated that “inflation expectations have risen.”

The BOJ's risk assessment noted there there were "extremely high uncertainties" for Japan's economy, including the course of COVID-19 at home and abroad, developments in Ukraine, and developments in commodity prices and overseas economies.

"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 Japanese yen seesawed after the monetary policy announcement (See JPY: USD/JPY Unwinds Brief Spike Through Y145.00 After BOJ Stands Pat On Policy).