Wednesday, February 5, 2020 - 21:22

MNI POLICY: BOJ Masai: Must Watch Virus Impact; Act As Needed

TOKYO (MNI) - Bank of Japan board member Takako Masai says the BOJ must watch the impact of the coronavirus on the global economy and the sentiment of firms and households in Japan.

"If there is a greater possibility that the momentum (toward achieving the price stability target) will be lost, the BOJ should not hesitate to take additional easing measures," Masai told business leaders in Nara City on Thursday.

She added, "The BOJ will persistently devise measures considered necessary at the time and continue to conduct monetary policy in an appropriate manner while carefully paying attention to both the positive effects and side effects of it policy."

Masai did not elaborate, however, on when and how the BOJ would consider more easing measures.

Masai is widely regarded as a neutral board member.

At the last meeting on Jan. 20-21, the BOJ left monetary policy unchanged, with little signs Japan's economy had deviated from the baseline recovery view, although broad downside risks to economic activity and prices remain. The BOJ has upgraded its median forecasts for real economic growth rates in this fiscal year, fiscal 2020 and fiscal 2021, boosted by the government's latest economic stimulus measures, although the medium-term inflation forecasts were left broadly unchanged from three months ago.

Other key points from Masai's speech:


--"Downside risks to Japan's economic activity and prices stemming from overseas economies seem to be still significant, although they have decreased somewhat."

--"Development in overseas economies remains a risk factor. I think that it is necessary to pay close attention to the effects on the world economy - including the Chinese economy - caused by the spread of the novel coronavirus, and the impact of these downside risks on firms' and household's sentiment in Japan."

--As for domestic demand, "the question is whether the moderate increasing trend in private consumption will be maintained."

--"I would like to closely monitor whether there will be a change in the trend in private consumption in the long run, as the effects of the decline in real income (caused by the tax hike) may appear gradually over time."

--"Prices have continued to show relatively weak developments compared to the economic expansion and tight labor market conditions."

--"Inflation expectations that are strongly affected by the adaptive formation mechanism do not rise easily."


--A further rise in real wages is necessary for the BOJ to maintain the baseline scenario that prices will rise toward the 2% price target, Masai said.

--She added: "I still consider these (foreign exchange rates and international commodity prices) to be risks since they not only directly affect prices but also may adversely affect business and household sentiment."

--MNI Tokyo Bureau; tel: +81 90-2175-0040; email:
--MNI Sydney Bureau; +61 405322399; email:

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