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Free AccessMNI 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
[TOPICS: MMJBJ$,M$A$$$,M$J$$$]
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Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.