BOJ Likely tp Stand Pat, Keep Outlook Mostly Unchanged

(Bloomberg) -- The Bank of Japan is likely to consider standing pat on its main policy tools and making no major changes to its economic outlook at next week’s meeting, people familiar with the matter said.

While keeping their guard high, BOJ officials want to continue to closely monitor the impact of measures implemented by the bank since March to combat the economic fallout from Covid-19, the people said. Financial markets remain relatively stable and companies aren’t facing significant funding problems, they said.

The BOJ board will publish its quarterly projections for prices and growth at the end of its two-day meeting on July 15. Bank officials see continued high uncertainty surrounding the economy, but developments since the previous report in April have been more or less as forecast, the people said.

That suggests no drastic downgrade is needed, though some slight changes are possible.

Officials hold different views on whether to continue offering growth projections in a range, as the bank did in April. Some think there’s too much uncertainty to allow for a pinpoint estimate, which is the usual approach, some of the people said.

Other officials say conditions have become less unpredictable so the board should go back to giving a median forecast, according to some of the people.

In April, the board forecast gross domestic product will shrink between 3.0% and 5.0% in the year through March 2021. Even the lower end of that range is more optimistic than the -5.3% projection by economists surveyed by Bloomberg.

©2020 Bloomberg L.P.