Bank of Japan Governor Haruhiko Kuroda on Thursday pledged to maintain steps to cushion the blow from the COVID-19 pandemic, warning that risks to the economic outlook were skewed down amid a resurgence of infections and new state of emergency curbs.
Kuroda also reiterated that the BOJ will take a balanced approach to policymaking as it considers the side-effects of prolonged easing, such as the damage excessive falls in super-long bond yields could inflict on pension funds’ margin.
“We’ll take into account the effects and cost of our policy, and aim to achieve moderate inflation accompanied by growth in corporate profits, jobs and wages,” the governor told parliament.
“It’s important to respond to the pandemic’s impact for the time being” by maintaining the BOJ’s pandemic-relief programme and ultra-loose policy, he added.
Kuroda stuck to the view the world’s third largest economy was picking up momentum thanks to robust exports and output.
However, he said there is also pressure on growth from a spike in new virus strains and state of emergency curbs extended through May, with retailers offering face-to-face services especially hard hit.
“Economic activity will remain below pre-pandemic levels for the time being,” Kuroda said. “Risks to the economic outlook are skewed to the downside.”
Japan’s economy is likely to have suffered a contraction in the first quarter and analysts expect any rebound to be modest in April-June, as new state of emergency curbs to prevent the spread of the virus continue to cool consumption.
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