Bank of Japan builds next year’s growth forecast, saving arms as virus risk goes down

TOKYO (Reuters) – The Bank of Japan maintained a stable monetary policy on Thursday and revised the economic forecast for the next fiscal year, revealing that it has provided enough impetus for now to reduce the impact of the COVID-19 pandemic.

But the central bank warned of diminishing risks to the outlook as a new state of emergency measures issued this month hit spending, sharpening the outlook among fragile recovery.

“Our projections are subject to change depending on developments in the pandemic and their impact on domestic and overseas economies. Uncertainty is therefore extremely high, ”the BOJ said in a quarterly report on the outlook.

In new quarterly forecasts, the BOJ slightly raised next year’s fiscal year growth forecast based on hopes that strong exports and the government’s large spending package will blow the pandemic.

The central bank, however, said Japan’s economy was “picking up as a trend,” offering a slightly more interesting outlook than last month when it said growth was “picking up.”

As would be expected broadly, the BOJ kept its targets under the yield curve (YCC) target at -0.1% for short-term rates and around 0% for 10-year bond yields.

Deputy Governor Masayoshi Amamiya was not present at the meeting because he stayed home as a warning after relatives took a PCR test for the coronavirus, the BOJ said.

Markets are focusing on Kuroda’s briefing after the meeting for suggestions on what could come out of the central bank’s March review.

With the pandemic seen as encouraging its motivation to continue for years to come, the BOJ announced a plan last month to conduct the investigation to make its policy more efficient. stable.

Sources have told Reuters that the BOJ will be considering ways to scale back their large asset purchase program and relinquish the grip of YCC to bring life back to markets damaged by years of interval heavy arrival.