BOJ signals pause after months of pandemic-fighting stimulus steps: June summary
The Bank of Japan can spend time examining the effects of the stimulus steps put in place since March, a board member said in a June rate review, underscoring BOJ’s view it has done enough for now to cushion the blow from the coronavirus pandemic.
Another member of the board said while the BOJ must use “all available tools boldly” to combat the pandemic, it can do so under the crisis-response framework already put in place, a summary of opinions showed on Wednesday.
“The current monetary easing framework is flexible, in that it is highly adaptable to various changes in developments,” one member was quoted as saying.
“Now that we’ve laid out sufficient schemes to respond to the pandemic, it’s desirable to carefully examine their effects for the time being,” said another opinion in the summary.
The BOJ eased policy in March and April, mainly by boosting asset buying and creating lending schemes to channel funds to companies hit by slumping sales amid the pandemic.
Its crisis-response framework consists of three components – facilities to pump money to firms via financial institutions, huge yen supply via government bond buying, and aggressive purchases of risky assets to soothe market jitters.
Some board members, however, were concerned about the risk that Japan may slip back into deflation as the pandemic wreaks havoc on an already weakening economy.
“An increase in corporate bankruptcies … could hurt jobs, inflation and financial conditions. We need to ensure Japan doesn’t return to deflation,” one member said.
The BOJ kept monetary policy steady in June.
The BOJ releases a summary of opinions from the nine board members several days after each rate review. It does not disclose the identity of the member who made the comments.