March 4, 2020 / 8:25 AM / a month ago

INSTANT VIEW-Kuroda says Japan feeling virus impact, BOJ will take action

TOKYO/HONG KONG, March 4 (Reuters) - Bank of Japan Governor Haruhiko Kuroda on Wednesday said the coronavirus outbreak could inflict big damage on the economy, stressing the central bank’s readiness to take “appropriate action” to underpin a fragile recovery.

Japan’s economy had been expected to recover in January-March, but the spread of the epidemic has hurt exports and consumption through a decline in Chinese tourists, Kuroda told parliament.

Here’s how analysts have reacted to his remarks:

CHOTARO MORITA, CHIEF RATES STRATEGIST, SMBC NIKKO SECURITIES

“As the Fed went so far as to make an inter-meeting rate cut, the Bank of Japan will announce its policy easing measures, either at its next policy meeting this month, or even before the scheduled meeting if share prices fall further.

“The most likely scenario is to increase its purchase of ETFs (exchange-traded funds). Cutting interest rates deeper into negative (territory) would be undesirable economically as that would further pressure financial institutions.

“But if the BOJ wants to make a symbolic move to showcase its international cooperation discussed at yesterday’s G7 call, then a rate cut cannot be ruled out.”

MASAMICHI ADACHI, CHIEF JAPAN ECONOMIST, UBS, TOKYO

“The Fed has now cut rates, it is our view that the ECB will move when it meets next week. If the BOJ does not follow, then that will add pressure to the currency.

“My view is that the BOJ will cut by 10 basis points at its next policy meeting on March 18. An emergency policy meeting is also possible after what we saw from the Fed. I would expect we will see a new lending facility established for commercial banks to access and a short-term policy rate cut.

“A rate cut could be a close call. I don’t think it would necessarily boost the economy, inflation or overall confidence but it would help reduce the negative factors which are impacting markets right now, especially for the currency markets.

“The BOJ could make further cuts following on from that but the consequences become larger and larger... the ammunition it has left is limited.”

Reporting by Hideyuki Sano in Tokyo and Scott Murdoch in Hong Kong; editing by John Stonestreet

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below