Japan’s central bank is expected to cut its growth and price forecasts for the current fiscal year at next week’s rate review, sources familiar with its thinking said, as the coronavirus pandemic weighs on the economic recovery.
But any such downgrade is unlikely to trigger an immediate expansion of monetary stimulus, with the Bank of Japan expected to maintain its assumption that the world’s third-largest economy will post a moderate pick-up, the sources said, Nikkei Asian Review reported.
“It’s somewhat weaker than three months ago,” one of the sources said of this fiscal year’s growth projections, a view echoed by two other sources.
The main reason for the downward revision in growth is the bigger-than-expected economic slump in April-June and soft consumption during the summer, the source said.
“Risks are skewed to the downside,” a second source said, adding that weak service-sector spending and prospects of deeper cuts in capital expenditure cloud the outlook.
