Live Comments BoJ: Unlikely for Japan’s economy to rebound significantly

    BoJ: Unlikely for Japan’s economy to rebound significantly

    In the Summary of Opinions at BoJ’s September 16-17 meeting, it’s noted that it’s “unlikely” for Japan’s economy to “rebound significantly”. Domestic demand, mainly in services consumption, will “likely remain at a low level” due to the pandemic. A “clear V-shaped recovery” has been seen in some sectors, but recovery in demand is “still no in sight in other sectors”.

    Year-on-year CPI is “likely to be negative for the time being”, is expected to “turn positive and then increase gradually with the economy improving”. Thus far, “deflationary price-setting behavior” for retaining customers “does not seem to have been widely observed”.

    As of monetary policy, it’s necessary to focus on supporting corporate financing and sustaining employment. “If the economic recovery is delayed, the potential growth rate of Japan’s economy could decline through rises in bankruptcies of firms and unemployment, and the functioning of financial intermediation also could deteriorate, reflecting the materialization of credit risk.”

    Full summary here.

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