Bank of Japan fears pandemic could push country toward deflation
Tokyo, June 24 (efe-epa).- Monetary policymakers of the Bank of Japan expressed concern that the COVID-19 pandemic could once again push the Japanese economy into deflation and discussed additional measures to avoid it, according to the summary of opinions at the monetary policy meeting published on Wednesday.
Several of the eight monetary policy board members of the central bank pointed toward the risk and called for additional stimulus measures for the country during their latest meeting in mid-June.
The policy board members, who were not named in the minutes of the meeting released, indicated that the current situation of the economy poses, “considerable obstacle to achieving the price stability target,” of the 2 percent inflation rate.
“The increasing number of bankruptcies of firms as well as suspension and discontinuation of businesses may have a negative impact on employment, prices, and finance,” one of the policymakers said in the meeting.
They further added that additional easing measures were needed, “to minimize the risk of deflation taking hold.”
The country’s core consumer prices dropped to 0.2 percent in May, marking the second consecutive decline and made the BoJ inflation target tougher to achieve.
In its June meeting, the BoJ boosted its lending package for the businesses affected by the pandemic which is a a part of a series of emergency measures taken to sustain the economy amid the crisis generated due to the virus.
The BoJ policy board in a 8-1 vote, also decided to maintain its extensive stimulus package in place since 2013, although added that it was determined to take flexible additional measures if needed due to the impact of the pandemic.
The BoJ expects that the Japanese economy would continue to remain in, “severe situation for the time being due to the impact of COVID-19 at home and abroad, although economic activity is expected to resume gradually,” according to the meeting. EFE-EPA