Bank of Japan cuts growth forecasts, showing optimism about recovery

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The Bank of Japan trimmed its forecast for the economy and prices in the current fiscal year, but revealed a more optimistic outlook on the chances of recovery, indicating that the stimulus measures it has taken are sufficient so far.
The central bank warned that the outlook is shrouded in intense uncertainty due to the repercussions of the pandemic on spending in the services sector and the renewed increase in HIV infections in Europe, which undermines the chances of a sustainable global recovery.
As was widely expected, the central bank kept its monetary policy unchanged, keeping its short-term interest rate target at -0.1% and maintaining a commitment to direct long-term rates around zero.
The Bank of Japan did not introduce any amendments to a package of measures aimed at easing financing restrictions on companies, which has become its main tool for dealing with the economy in the midst of the pandemic that is ravaging it.
In a quarterly report, the bank cut its growth forecast for the current fiscal year ending in March 2021 to a contraction of 5.5% from the 4.7% contraction in the July forecast, due to weak service spending during the summer.
The central bank also lowered its forecast for core consumer price inflation in the fiscal year to a decline of 0.6% from the 0.5% decline in the July forecast.
The report said, “It is likely that Japan’s economy in general will improve with the repercussions of the Corona virus pandemic gradually diminishing, but the pace of recovery will be moderate.” (Reuters)

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