The Bank of Japan (BOJ) is expected to cut growth forecasts for the fiscal year 2021/22 in its latest quarterly projections, according to Reuters, citing four sources familiar with the central bank’s thinking. Another state of emergency for Tokyo risks negatively affecting consumption, according to Reuters.
“However, the central bank is likely to maintain its assessment that the world’s third-largest economy is on the mend, as strong exports and output offset some of the slowdown in consumer demand.”
“The fundamentals for a recovery are in place, but the timing may be pushed back slightly as the curbs weigh on the economy’s expected bounce in the current quarter.”
“The BOJ is expected to raise its consumer inflation projection for this fiscal year in the latest estimates, owing to recent increases in energy costs.”
This comes just two weeks before the Olympics, when Japanese Prime Minister Yoshihide Suga proclaimed a state of emergency in Tokyo. On Wednesday, Tokyo recorded 920 new infections, the most since May 13.
Despite news that Japan’s economic growth estimates have been cut, the yen is strengthening amid a growing risk-off atmosphere caused by rising coronavirus fears.
USD/JPY is currently trading at 109.96, down 0.62 percent from its two-week low of 109.75 earlier in the day./n
