BOJ debated monetary policy implications of coronavirus: July meeting summary
Reuters
Published Jul 26, 2020 08:18PM ET
Updated Jul 26, 2020 09:55PM ET
By Leika Kihara
TOKYO (Reuters) - Bank of Japan policymakers debated how the COVID-19 pandemic could reshape monetary policy and its impact on the economy, a summary of their opinions at a July rate review showed, a sign they were bracing for a prolonged battle against the health crisis.
Many in the nine-member board warned any domestic recovery from the devastating economic impact of the pandemic would be modest and could be delayed depending on how long it takes to contain the outbreak, according to the summary released on Monday.
"The BOJ must deepen its understanding on how COVID-19 could reshape monetary policy. It must scrutinise the transmission channel and effect of its policies, given the risk of further declines in prices and growth expectations," one member was quoted as saying.
"We must take further action promptly as needed, with an eye on whether the existing policy framework is sufficient," according to another opinion shown in the summary.
Several board members cautioned that any further economic stress would require policymakers to pay close attention on Japan's banking system and long-term inflation expectations, the summary showed.
The remarks highlight the dilemma the BOJ faces as it struggles to cushion the economic blow from the pandemic with a dwindling policy tool-kit. Years of ultra-low interest rates have also strained commercial banks, stoking fears that further rate cuts could backfire by eroding their ability to lend.
At the July rate review, the BOJ kept monetary policy steady and maintained its view that the economy would gradually recover from the crisis.
The global spread of the coronavirus has forced the BOJ to put off efforts to achieve its elusive 2% inflation target for the time being, and focus on pumping money to cash-strapped firms hit by the outbreak.
The BOJ releases a summary of opinions voiced by its board members about 10 market days after each rate review. It does not disclose the identity of the member who made the comments.
Get The News You Want
Written By: Reuters
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.