On the third trading day of the week, markets focused on the Bank of Japan’s (BoJ) Summary Report, which included its assessments of economic and financial developments. The report said that coronavirus (Covid-19) has an extremely severe downward pressure on Japan’s economy and underlined that despite the gradual opening of economic activities, there are uncertainties regarding how strong the recovery will be.

Report further suggested that sustaining downside risks on the global economy, including Japan, would be inevitable without effective vaccines and drugs.

Due to future prospects, a warning was made to see that the prices in the financial markets react high compared to the current serious situation of the real economy and that future economic developments should be carefully monitored to see if there will be an adjustment in asset prices.

the annual rate of change in the consumer price index (CPI) is not possible to approach the 2 percent target due to the Covid-19 and crude oil prices since the demand is not expected to accelerate in the short term perspective, it is stated that inflation is expected to increase gradually with the recovery of the real economy in the foreseeable future.

The report also stated that the effects of a series of large-scale responses decided upon should be followed based on the cooperation between the financial and monetary authorities and the functioning of the financial system.

BOJ stressed that all measures taken within the current framework to maintain the labour market and financial market stability are necessary not only in response to the coronavirus crisis but in support of the subsequent economic recovery.


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