Governor Haruhiko Kuroda said that the Bank of Japan will consider extending its pandemic-relief programme beyond September deadline if necessary. This is because the country struggles with a spike in covid infections that is crippling the economy. He also said that the world’s third-largest economy remains on a path toward recovery. This is because robust exports and corporate profits offset some of the pandemic’s damage to consumption.
He warned that there was high uncertainty about the pace of vaccine rollouts. This could inflict longer-than-expected pain on the economy. In a seminar Kuroda said that for the time being, risks to Japan’s economic outlook are skewed to the downside. Taken into account the impact of the pandemic, they will consider extending further the deadline for the BOJ’s measures to ease corporate funding strains caused by the crisis, said the governor. The BOJ last year ramped up asset purchases.
While big manufacturers benefiting from solid overseas demand have paid back some of the loans. Small retailers remain under stress as curbs on activity to prevent the spread of the virus hurt consumption. Many analysts expect the BOJ to decide on extending the programme. This is because Japan is lagging other major economies in containing the pandemic. In first quarter the Japan’s economy has shrank more than expected because of the new infection hit and a slow vaccine rollout.
Kuroda said that the economic activity will remain below post-pandemic levels for the time being. This is regarding widening divergence among sectors on the pace of recovery. He also added that the near-term focus would be to respond to the pandemic’s impact. This suggests that Japan would fall well behind other central banks in withdrawing crisis-response stimulus measures.