The Bank of Japan’s governor, Haruhiko Kuroda, said on the 12th that the measures to mitigate the economic damage caused by the pandemic of the new corona virus have not been exhausted, and that additional monetary easing measures will be taken. He emphasized that he was ready to take it.
An online seminar hosted by the Institute of International Finance (IIF) pointed out that the Japanese economy bottomed out in April-June. Overall, it seems to be “much better” than it was a few months ago, with exports, production and capital spending “quite strong.”
However, consumption centered on the service industry is extremely weak, and unless an effective new corona vaccine is developed, it is highly likely that consumption will continue to be sluggish for the time being. “We will carefully monitor the effects of the new coronavirus infection and do not hesitate to take additional mitigation measures as needed,” he said.
On top of that, “The Bank of Japan has not run out of policy tools, but has many policy tools to combat (the blow of the new coronavirus). We are flexible in considering the steps to be taken. And it’s innovative. “
Inflation is expected to remain negative for the foreseeable future as the new coronavirus disease has “significantly” curtailed consumer demand. However, it is expected to recover next year as the economy recovers.
“We already have a fair, stable and well-developed medical insurance and pension system, so we don’t need so-called negative income tax or basic income at this time,” he said. Pursuing fiscal sustainability over the medium to long term, saying that long-term bond yields such as 20-year bonds, 30-year bonds, and 40-year bonds are helping pension funds and life insurance companies. The government’s commitment was very important to maintain investor confidence in Japanese government bonds.
He said he would defend the negative interest rate policy, saying that an interest rate of minus 0.1% was imposed on only a part of the reserve.
In addition, it announced that it will start testing the digital yen next spring in order to consider the requirements and basic principles for the future issuance of digital currencies. “It is very important that the central bank’s digital currency does not replace or abolish private payment services,” he said.