BOJ Monetary Policy Meeting Discussed Risks to Japanese Economy From Coronavirus

According to the latest monetary policy meeting minutes, BOJ policymakers have highlighted concerns about an impending stagnation in the Japanese economy due to the coronavirus pandemic. The central bank had convened a sudden meeting on March 16 to discuss the possible economic impact of the outbreak and steps to take against it.

Japan’s economy has been under strain for some time over the US-China trade tensions first and then because of the recent sales tax hike even before the coronavirus crisis exploded across the country and the world. Unlike other economies that could bounce back into recovery once the threat of the virus is overcome, Japan could see its economy falling into deep stagnation.

The one glimmer of hope that it had from the upcoming Tokyo Olympics 2020 has also faded away after the IOC announced a one year postponement of the event. Japan has spent nearly $12 billion on getting the country ready for the large scale event, which was likely to offer a massive boost to its economy.

One policymaker had proposed that the BOJ could explore further measures such as increasing purchases of government bonds to lend additional support to the economy. Unlike several other leading central banks worldwide, the BOJ has limited means for further easing as a result of its ultra-loose monetary policy and deeply negative interest rates, leaving it with limited options to prop up the economy.

The most recent meeting forced the central bank to unveil more monetary easing, but this is likely to offer only temporary relief to markets. The BOJ is scheduled to hold its next meeting on April 27-28 when it could offer more insight into the extent of economic harm that the coronavirus has caused.