Bank of Japan debated steps to make policy sustainable to battle slowdown

Topics Bank of Japan | Japan

Headquarters, Bank of Japan | (Photo: Wikimedia Commons)

By Leika Kihara

TOKYO (Reuters) - Some Bank of Japan (BOJ) policymakers saw early bright spots in the pandemic-hit economy even as they debated steps to make the bank's ultra-loose monetary policy more sustainable, a summary of opinions voiced at the March rate review showed on Monday.

At the March meeting, the BOJ decided on a range of steps to make its policy tools sustainable enough to weather a prolonged battle to cushion the economic blow from COVID-19, and fire up inflation to its perennially elusive 2% target.

"Japan's economy may be shifting away from a downward trend since the outbreak of COVID-19, with exports and output remaining firm," one of the nine board members was quoted anonymously as saying in the summary.

The BOJ releases a summary of opinions voiced at each policy-setting meeting several days after the meeting, but does not disclose who expressed the opinions.

"Although uncertainties remain over COVID-19 ... downside risks to economic activity at home and abroad have been contained with no signs of increase in industries suffering from deteriorating business conditions," another board member said.

On prices, some board members warned that risks of deflation or prolonged price stagnation remained the BOJ's primary concern, even as some Western economies were experiencing an uptick in inflation, the summary showed.

The remarks reinforce a dominant market view that the BOJ will keep monetary policy steady for the time being in hope a rebound in overseas demand will underpin Japan's export-reliant economy.

One BOJ board member voiced hope that the review of its tools would allow the central bank to stick to its current policy framework "for a few years to come".

In a sign the BOJ's policy review had gained consent from the government, a finance ministry representative attending the March meeting said he had "no disagreement" over the decision, according to the summary.


(Reporting by Leika Kihara; Editing by Chang-Ran Kim and Kenneth Maxwell)

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

Dear Reader,

Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.

We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

Business Standard is now on Telegram.
For insightful reports and views on business, markets, politics and other issues, subscribe to our official Telegram channel