Por Leika Kihara
TOKYO, May 6 (Reuters) – Bank of Japan (BOJ) monetary policy makers agreed on the need to focus on keeping interest rates low and stable while the economy remains under stress. caused by the COVID-19 pandemic, minutes from the central bank’s March meeting showed Thursday.
The nine members of the council agreed that there was “extremely high uncertainty” about the outlook, according to the minutes, since the restrictions of the state of emergency to contain the pandemic affect consumption and help to maintain the risks of deflation.
One member said that the risk of deflation remained higher than that of inflation for Japan, as wages and inflation expectations remain weak.
“Some members said that although the beginning of vaccine distribution was a positive sign, the evolution of the pandemic continues to deserve attention,” according to the minutes.
The observations underscore the Bank of Japan’s determination to maintain its massive stimulus, as the slow rollout of vaccines and a fourth wave of infections cloud prospects for the economy to recover firmly.
Japan lags behind other major economies when it comes to a strong recovery from the pandemic hit. An expected rebound in growth in April-June is marred by an increase in infections that could lead to an extension of the restrictions of the state of emergency.
(Reporting by Leika Kihara; Editing by Chang-Ran Kim and Christopher Cushing; translated by Flora Gómez in the Gdansk newsroom)