Bank of Japan board members expressed concerns over downside risks to private spending, including services consumption, at the July 20-21 policy meeting, minutes released on Wednesday showed.
“They shared the recognition that, if vigilance against COVID-19 persisted in Japan, particularly among seniors, there was a risk that upward pressure from pent-up demand would weaken by more than expected and private consumption would deviate downward from the baseline scenario,” the minutes showed.
“A few members, pointing to the recent resurgence of COVID-19, expressed the view that services consumption, for example, could be pushed down again.”
The members were also worried over downside risk to the global economy.
“Specifically, they shared the recognition that, amid a continued rise in inflation, mainly in advanced economies, central banks had accelerated the pace of policy rate hikes, and that there was concern in global financial and capital markets over whether it was possible to contain inflation and maintain economic growth simultaneously,” the minutes showed.
“On this basis, members shared the view that there was a risk that global financial conditions would tighten further through adjustments in asset prices, fluctuations in foreign exchange markets, and capital outflows from emerging economies, eventually leading overseas economies to deviate downward from the baseline scenario.” (See MNI BRIEF: BOJ's Kuroda Voices Concern Over Economic Downside).