BOJ Sits Tight While Taking Gloomier View of Economy This Year

The Bank of Japan painted a gloomier picture of the economy this year and left policy unchanged, while indicating it remains ready to take further action to help the recovery if needed.

The BOJ kept its short-term interest rate at -0.1%, its 10-year yield target around zero and left its asset purchases unchanged. Some 96% of economists surveyed before the decision predicted the central bank wouldnt add to its stimulus at the meeting.

The banks economic forecasts, updated at the meeting, point to a deeper slump this year, but suggest a slightly faster pickup in the following years, though the recovery will still be slow.

The latest decision and projections suggest the central bank, like many of its global peers, is digging in for a long holding pattern on policy while it keeps a close eye on virus developments, corporate solvency, unemployment and market stability.

“The Federal Reserve and the European Central Bank arent ready to introduce new policy measures and neither is the BOJ,” said Nobuyasu Atago, economist at Okasan Securities and a former BOJ official.

“The economy is far from normalizing. The BOJ is looking to monitor the effectiveness of its current policy measures, as it does what it can. But the BOJ isnt in a position to be taking additional action like deepening its negative rate, which would cause side effects,” he added.

Even though Japan has faced a far less deadly COVID-19 outbreak than in Europe and the U.S., a recent rise in Tokyo cases pushed the city to raise its warning level Wednesday, fueling continued caution among policy makers, companies and households over a possible resurgence.

But the status of the pandemic beyond Japan‘s shores also remains a major concern. The country’s manufacturers are heavily reliant on demand from markets where the virus outbreak rages on.

在日本央行已经从进一步的政策行动，在其最近两次定期会议克制，在流感大流行初期，当它扩大了企业债券和股票型基金，承诺以维持产量低，以尽可能多的购买政府债券的购买，并介绍了两种贷款方案陷入困境的企业下列行为的混乱。

[18] 上个月，日本央行在900000亿日元估计苦苦挣扎的公司它的两个专项经费项目的规模（ $ 839十亿）。方案下贷款余额为22.6万亿日元，根据上周央行。日本银行贷款在近三十年比上月上涨来最快的速度，部分原因是由于这些程序。 {18} 虽然破产从6月较上年同期增长6.3％，失业率上升至2.9 ％5月份，数据显示，央行和政府的努力正在帮助限制从危机中受损。在失业率上涨做空远小于跳跃在其他发达经济体看到。

{20} “现在我希望日本央行将保持在等待和观望模式。当然，如果Covid-19感染看到一只第二波，日本央行将不得不考虑它的响应，但现在他们已经做了所有他们可以，”桑原正树说，野村证券。 {20 } 预测周期 预测日期 实际GDP CPI（较少新鲜食物） 财政2020 2020年7月 -4.7％ -0.5％ 2020年4月 -5.0 ％至-3.0％ -0.7％至-0.3％ 财政2021 2020年7月 3.3％ 0.3％ 2020年4月 2.8％至3.9 ％ 0.0％至0.7％ 财政2022 2020年7月 1.5％ 0.7％ 2020年4月 0.8％至1.6％ 0.4％至1.0％的 在板表示，预计的经济收缩的12个月4.7％至三月2021四月，它看到了3％和5％之间的某处的收缩。中值投影的返回表明该行现在是关于路径前进少不确定

通胀方面，日本央行预计价格下跌0.5％，本财年，围绕给定的最后一个季度的范围的中间。

该行表示，仍认为价格增长下一财年恢复，但犯规工程膨胀其2％的目标附近的任何地方上涨可预见的未来 - 另一个信号，即州长黑田和他的同事是他2023年4月任期结束前不太可能加息。

什么彭博的经济学家表示

“经济日本央行的评估和预测显示，在本财年坎坷不平通过2021月，随着反弹至增长的未来年。它假定没有大的挫折经济从在日本或海外Covid-19感染的第二波”

- 纪Masujima，经济学家

{ 28} 点击这里阅读更多。 {28} “纵观2022财年的预测，我们可以看到价格没有看到达到了1％的增长。这表明，日本央行前所未有的宽松政策将是几乎是无止境的，”康成野，首席市场经济学家瑞穗证券说。

{30} 目前，日本央行仍然有范围注入更多钱进不改变其政策的市场。它的交易所交易基金的购买是刚下的七万亿日元上个月的年率，远离其上限为12万亿日元，彭博的计算表明。{15}

Long Hold

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The BOJ has now refrained from further policy action at its two most recent regular meetings, following a flurry of action during the early days of the pandemic when it expanded purchases of corporate bonds and stock funds, pledged to buy as much government debt as needed to keep yields low and introduced two lending programs for struggling companies.

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Last month, the BOJ estimated the size of its two special funding programs for struggling companies at 90 trillion yen ($839 billion). The outstanding amount of loans under the programs was 22.6 trillion yen, according to the central bank last week. Japans bank lending rose at the fastest pace in almost three decades last month, partly due to those programs.

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While bankruptcies rose 6.3% in June from a year earlier and unemployment increased to 2.9% in May, the figures suggest that central bank and government efforts are helping to limit the damage from the crisis. The uptick in the jobless rate is far smaller than the jumps seen in other developed economies.

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“For now I expect the BOJ to remain in wait-and-see mode. Of course, if there‘s a second wave of Covid-19 infections, the BOJ will have to think about its response, but for now they’ve done all they can,” said Masaki Kuwahara at Nomura Securities.

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The board said it sees the economy shrinking 4.7% in the 12 months through March 2021. In April, it saw a contraction of somewhere between 3% and 5%. The return of a median projection suggests that the bank is now less uncertain about the path ahead.

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On inflation, the BOJ forecast prices falling 0.5% this fiscal year, around the middle of the range given last quarter.

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The bank said it still sees price growth returning next fiscal year, but doesnt project inflation rising anywhere near its 2% target for the foreseeable future -- another signal that Governor Kuroda and his colleagues are unlikely to raise interest rates before his term ends in April 2023.

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What Bloombergs Economist Says

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“The BOJs assessment of the economy and forecasts point to a rough ride in the fiscal year through March 2021, with a rebound to growth next year. That assumes no major setbacks to the economy from a second wave of Covid-19 infections in Japan or overseas.”

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--Yuki Masujima, economist

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Click here to read more.

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“Looking at the fiscal 2022 forecast we can see prices aren‘t even seen reaching 1% growth. That shows that the BOJ’s unprecedented easing is going to be almost endless,” said Yasunari Ueno, chief market economist at Mizuho Securities.

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For now, the BOJ still has scope to inject more money into markets without changing its policy. Its purchases of exchange traded funds were just under an annualized pace of 7 trillion yen last month, far from its ceiling of 12 trillion yen, Bloomberg calculations show.

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The BOJ held 4.3 trillion yen of commercial paper and 4.4 trillion yen of corporate bonds as of July 10; both holdings are less than a half of the central banks raised limits.

— With assistance by Yoshiaki Nohara, and Yuko Takeo

(Adds economists comments)