BOJ policymakers saw prospects of quicker recovery

24 June, 2021 12:00 AM printer

TOKYO: Bank of Japan board members voiced hope in April that the massive stimulus deployed by nations will quicken Japan’s economic recovery, with domestic consumption potentially providing a tailwind as accumulated savings get spent.

While exports have already benefitted from solid global demand, consumption will rebound if vaccinated households splurge on “forced savings” accumulated during stay-at-home policies to prevent the spread of the COVID-19 virus, the BOJ members predicted in a policy meeting in April, its minutes showed on Wednesday, report agencies.

The upbeat assessment on the outlook reinforces market expectations that the central bank in the world’s third-biggest economy will keep monetary settings unchanged for the time being, in the hope its ultra-loose policy and pandemic-relief programmes will sustain a moderate recovery.

“There’s a chance the stimulus measures taken by advanced nations could quicken the pace of recovery in domestic and overseas economies,” board members were quoted in the minutes as saying.

The members said there was uncertainty “over the pace and effect of coronavirus vaccinations, which could heighten downward pressure on economic activity”.

But a recent pick-up in vaccinations is giving rise to hope consumption may emerge from the doldrums.

One board member said Japanese households may tap their “forced savings” accumulated last year sooner than initially expected, when taking into account the boom in consumption seen in the United States.

In April, the BOJ estimated that such “forced savings,” or money households were forced to save when curbs in activity were adopted to stop the spread of the pandemic, may have amounted to 20 trillion yen ($181 billion) last year. That would be roughly 7% of Japan’s disposable income, it said.


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