MNI BRIEF: BOJ Nakamura Warns On Downside Risk On Covid Spread

Bank of Japan board member Toyoaki Nakamura said on Wednesday that attention must be paid to downside risks to the economy amid a state of emergency to curb the spread of Covid-19.

"Japan's economy is in a severe situation but the economy is recovering as a trend," Nakamura told business leaders in Miyazaki City via an online conference.

Nakamura made three points to watch about the downside risks, warning the emergence of pent-up demand is delayed, and corporate price-setting activities and debt repayment and the medium- and long-term growth expectations held by businesses need attention.

"Corporate price cuts to stimulate demand will not expand" the economy, he said, adding "a rise in those growth expectations is necessary to achieve a sustainable economic growth."

Nakamura didn't elaborate on the outlook for monetary policy, including how the BOJ would cope with risks.