* Monday’s steps aimed at addressing funding strains - Kuroda
* Adds BOJ ready to ease more if economy worsens further
* Impact on economy could be ‘severe’ if outbreak prolonged
* Kuroda’s remarks keep alive expectation of April BOJ action
* BOJ to cut growth, price f’casts in April rate review (Adds quotes, implications on next BOJ policy move)
By Leika Kihara
TOKYO, March 18 (Reuters) - Bank of Japan Governor Haruhiko Kuroda said the central bank will ease monetary policy again if the economy worsens further due to the fallout from the coronavirus epidemic, keeping alive expectations for additional stimulus as early as next month.
The BOJ ramped up purchases of risky assets and created a new programme to deal with corporate funding strains in an emergency meeting on Monday, joining other major central banks in efforts to prevent a global recession.
Kuroda said Monday’s steps were taken to deal with near-term problems the epidemic could create by pushing up funding costs for companies and destabilising financial markets.
Given uncertainty over how long it takes for the virus to be contained, the BOJ must now be ready to deal with the long-term impact the epidemic will have on the economy, he told parliament on Wednesday.
“It’s unclear when the epidemic will be contained. It is also spreading across the globe with a lag, starting out with Asia and widening to Europe and the United States,” Kuroda said.
“If it takes long to contain the virus, that could have a severe impact on the economy. If so, we will of course take additional monetary easing steps without hesitation.”
The remarks suggest the BOJ is taking a two-stage approach, by adopting stop-gap steps this month to deal with the immediate hit to firms from the virus, while considering bolder monetary measures next month.
The BOJ’s quarterly “tankan” survey, due on April 1, will be crucial in gauging its next policy move as it offers clues on how the virus affected business mood and corporate capital expenditure plans.
The biggest fear among policymakers is that virus fears will prompt firms to slash spending, adding to recent growing signs that Japan is heading toward recession.
The BOJ downgraded its economic assessment on Monday to say the economy was “weakening,” a bleaker view than in January when the central bank said it was expanding moderately as a trend.
At the April rate review, the BOJ will conduct a quarterly review of its economic and inflation projections. The epidemic and the subsequent market rout make it a near certainty the bank’s growth and price forecasts will be cut, analysts say. (Reporting by Leika Kihara Editing by Chang-Ran Kim & Simon Cameron-Moore)