Bank of Japan confident of recovery as vaccination speeds up

Economic boost: A flight attendant being vaccinated at the Haneda Airport in Tokyo. A positive economic cycle is kicking off in Japan due to progress made in vaccinations. — AP

TOKYO: Bank of Japan (BoJ) policymakers hope that accelerating coronavirus vaccinations will prop up the economy, but see any inflationary pressures as subdued given the fragile recovery, according to a summary of their debate at a June 17-18 meeting.

Japan has only recently emerged from a fourth wave of infections.

A decline in the pace of new cases and a pick-up in vaccinations prompted authorities to ease a state of emergency in Tokyo and eight other prefectures on June 20.

“A positive economic cycle is kicking off in Japan due to progress made in vaccinations,” one of the nine board members was quoted as saying.

At the June meeting, the BoJ kept monetary policy steady and unveiled a plan to boost funding for fighting climate change to be rolled out by the end of this year.

“While uncertain and patchy, progress in vaccinations has made the global economic recovery clearer.

“Japan, hopefully, will see something similar happen,” another opinion showed.

The upbeat assessments underscore the BoJ’s view the economy will emerge from the doldrums on robust exports and a pick-up in domestic demand, without needing additional monetary support.

Some policymakers saw signs of a rebound in inflation with one voicing hope that pent-up demand will help accelerate inflation in the latter half of this year, the summary showed.

But none saw excessive inflationary pressure building up, as soft demand and cellphone fee cuts offset rising input costs.

“Rising commodities prices and improvements in domestic demand may push up inflation, though such upward price pressure will lack momentum,” one member said.

Japan’s economy shrank an annualised 3.9% in the first quarter and analysts expect any rebound in the April to June quarter to be modest as Covid-19 movement restrictions limit consumption.

Core consumer prices rose just 0.1% in May from a year earlier, as weak spending discouraged firms from passing on higher raw material costs to households.

On the BoJ’s planned climate change plan, one board member said it must be a “flexible” one as the circumstances around the topic remain fluid, the summary showed.

A government representative who attended the June meeting called the idea a “timely” plan as Prime Minister Yoshihide Suga’s administration promotes green innovation among the key parts of its strategy to boost Japan’s economic growth. — Reuters

Article type: metered
User Type: anonymous web
User Status:
Campaign ID: 46
Cxense type: free
User access status: 3
Join our Telegram channel to get our Evening Alerts and breaking news highlights

Next In Business News

Bursa tracks higher on improved sentiment
UOB Malaysia taps Prudential’s VF2F feature to offer digital insurance
Private, public sectors urged to work together for fast transition to net-zero economy
Ringgit opens lower against greenback on FOMC's upbeat assessment
Quick take: Vizione rises after securing RM500mil GDV project
Bursa gets a lift from positive global sentiment
Quick take: Opcom shares hit highest in six years
Trading ideas: Sedania, IOI Properties Rhone Ma, Vizione, SCIB
JHM to see further lockdown impact in 3Q
Fed's Powell: 'no one' happy with fellow policymakers' trading

Stories You'll Enjoy