RESURGENT COVID CAUSES BOJ TO EXPECT SLOWDOWN OF JAPAN ECONOMY

Bank of Japan (BOJ) Governor Haruhiko Kuroda warned of downside risks to the economy hit by another state of emergency over the novel coronavirus, as its outlook for the current business year was slightly cut.

Yet, Kuroda brushed aside concerns that Japan may slip back into deflation. He also said the central bank will check "the balance" between the benefits and side-effects of the policy tools that have been employed to attain its 2 percent inflation target, already elusive and now further away amid the pandemic, Kyodo News reported.

The BOJ is reviewing its ammunition and plans to announce its findings as early as March. The bank will take additional easing steps if needed, Kuroda said. Earlier in the day, the BOJ board decided to maintain its ultraloose monetary policy at the end of a two-day meeting.

"There is heightened uncertainty over the impact that the spread of infections would have on the economy and finance," Kuroda told a press conference after the policy meeting.

"We will be keeping a close watch and will not hesitate to take additional easing steps when deemed necessary."

His remarks came after the BOJ cut its economic outlook for fiscal 2020 through March to a 5.6 percent contraction, against its forecast in October of a 5.5 percent shrinkage.

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