The Bank of Japan is expected to slightly revise up its economic forecast for next fiscal year on hope the government’s stimulus package will moderate the pain from state of emergency measures to combat COVID-19, sources familiar with its thinking said.
In a quarterly review of its projections due out next week, the central bank is also seen roughly maintaining its view the world’s third-largest economy is headed for a moderate recovery, three sources said on condition of anonymity.
Having already extended last month a raft of measures to ease funding strains for firms hit by the coronavirus pandemic, the BOJ is expected to hold off on ramping up stimulus at the Jan. 20-21 policy meeting, the sources said.
The central bank, however, will likely warn of escalating risks from the new state of emergency measures that are set to cool consumption, they said.
There’s a lot of uncertainty and risks are skewed to the downside. But conditions haven’t deteriorated enough to overhaul the BOJ’s baseline economic scenario.