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Kuroda vows to keep BOJ’s focus on COVID-19 response amid weak inflation

The Bank of Japan would continue to focus on cushioning the economic blow from the coronavirus pandemic, given lingering uncertainty over the outlook and subdued inflation, Governor Haruhiko Kuroda said on Monday.

Sluggish domestic demand and companies’ reluctance to pass on higher raw material costs to consumers will likely keep any rebound in inflation moderate, Kuroda said.

Export and output growth will also slow in the near term as Southeast Asian factory shutdowns blamed on the pandemic hit Japanese manufacturers, he added.

“It’s true Japan’s economy has been held back by the successive waves of COVID-19,” Kuroda said in a speech delivered at an online meeting with business leaders in Osaka, western Japan, repeating the central bank’s readiness to ease monetary policy further if needed.

But he said disruptions to the supply chains were likely to be temporary, and Japan’s economic recovery would become clearer as the impact of the pandemic subsides.

Under yield curve control, the BOJ pledges to guide short-term interest rates at -0.1% and 10-year bond yields around 0% via aggressive money printing.

It also extended until March next year a range of programmes to ease funding strains for companies hit by the pandemic.

“While corporate funding conditions have improved from a while ago, those of firms offering face-to-face services remain severe,” Kuroda said.

“Given high uncertainty over the outlook due to the spread of the Delta variant, the BOJ must continue to focus on responding to the pandemic for the time being,” he said.
Source: Reuters (Reporting by Leika Kihara; Editing by Simon Cameron-Moore Editing by Chang-Ran Kim)

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