MNI POLICY: BOJ Opinions: Board Prepares For Further Worsening

     TOKYO (MNI) - The Bank of Japan board largely agreed to prepare for a

further worsening of conditions across the economy at the April 27 policy

meeting, agreeing to fully support corporate financing, the summary of opinions

published Monday showed.

     One member said, "Further easing measures, mainly to provide liquidity, are

necessary this time as well. It also is important to fully prepare for a

possible further worsening of the situation."

     Another member said, "Corporate profits have deteriorated and some firms

have gone bankrupt because of issues regarding their financing. At present, it

is necessary to provide ample liquidity in order to secure the supply-side

infrastructure of the economy."

     A different member said, "The high-priority task for now is to prevent

firms from going bankrupt and protect employment by supporting fund-provisioning

in terms of corporate financing."

     The BOJ moved to boost its easy policy, aiming to strengthen support for

corporate financing and shield the wider economy, both hard hit by the fallout

from the coronavirus outbreak.

     The bank increased the scale of its combined purchases of commercial paper

and corporate bonds to JPY20 trillion from JPY3.2 trillion and JPY4.2 trillion

respectively.

     Other key points from the summary of opinions:

     MONETARY POLICY

     --"Downward pressure on Japan's real economy has intensified further due to

the spread of COVID-19. Although financial and capital markets have been less

volatile recently, partly reflecting policy responses taken by major economies,

there is a great risk that they will become unstable again with the real economy

becoming depressed on a global basis. Thus, the current situation continues to

warrant vigilance."

     --"It is possible to contain the risk of a surge in the inflation rate as

long as the price stability target is maintained firmly. Given the current

situation where there is concern that the economy might fall into deflation,

fiscal and monetary authorities can further cooperate with each other regarding

their policies."

     ECONOMIC DEVELOPMENTS

     --"Downward pressure on Japan's real economy has intensified further due to

the spread of COVID-19. Although financial and capital markets have been less

volatile recently, partly reflecting policy responses taken by major economies,

there is a great risk that they will become unstable again with the real economy

becoming depressed on a global basis. Thus, the current situation continues to

warrant vigilance."

     --"The global economy, including Japan, has been in an increasingly severe

situation, as seen in the fact that demand has either declined significantly or

disappeared, excluding some exceptions such as for IT-related goods and daily

necessities, and that business conditions have deteriorated further, mainly in

the services industry."

     --"Although it is assumed that there will be significant downward pressure

on Japan's economy in the short run, such pressure seems to be attributable

largely to constrained economic activity that results from preventive measures

against the spread of COVID-19."

     PRICES

     --"As the decline in the economic growth rate is likely to put downward

pressure on the output gap and inflation expectations, coupled with a

significant decline in crude oil prices, the inflation rate is expected to be in

negative territory through fiscal 2021 and return to slightly positive territory

thereafter."

--MNI Tokyo Bureau; tel: +81 90-2175-0040; email: hiroshi.inoue@marketnews.com

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

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