Bank of Japan Governor Haruhiko Kuroda confirmed that the Japanese GDP may suffer from deflation in the second quarter of the year. In an online seminar, he made the following points:
The Bank of Japan will continue to closely monitor the impact of coronavirus outbreak and is willing to take all appropriate measures as necessary.
Current conditions do not warrant a reduction in the yield curve.
Yields may be reduced if necessary.
The BoJ is focused on maintaining the stability of financial markets.
There is no change in bank inflation target at 2%.
The impact of the pandemic has diminished globally in the second half of this year, with a gradually accelerating economic recovery expected.
Inflation is also expected to increase gradually.
The Japanese economy is likely to improve but there is a risk that the effects of the second wave of the virus could push the Japanese economy into recession.
It is necessary to maintain the stability of the financial system in Japan, a country where financial conditions are very adaptive.