BOJ Quarterly Outlook Report: Japan's economy in severe state but recovering as a trend

Following are the key takeaways from the Bank of Japan‘s (BOJ) quarterly outlook report that accompanied the monetary policy statement this Thursday.

Key quotes

Japan's economy in severe state but recovering as a trend.

Japan's financial intermediation may stagnate if financial institutions' profits come under prolonged pressure from COVID-19.

BOJ will take additional easing steps without hesitation as needed with eye on impact of COVID-19 on economy.

Medium-, long-term inflation expectations to hover on a weak note, but resume uptrend as prices gradually rise.

Risks to Japan's economic, price outlook skewed to downside.

There is extremely high uncertainty over economic, price outlook.

Consumption, particularly that for services, likely to stay under strong downward pressure.

BOJ’s forecasts are based on assumption pandemic's fallout will gradually ease toward end of its 3-year projection period.

Japan's exports likely to slow pace of increase but rise broadly thereafter.

Extremely high uncertainty over economic impact of COVID-19.

Financial systems maintaining stability as a whole with financial mediation smoothly in place.

Uncertainty is high on corporate price setting activity and how that will affect prices.

Pandemic impact could subside earlier than expected if vaccines become widely available but pace of distribution and vaccines' effects are uncertainties.

Board's real GDP median forecast for fiscal 2020 at -5.6% vs -5.5% in Oct.

Board's real GDP median forecast for fiscal 2021 at +3.9% vs +3.6% in Oct.

Real GDP median forecast for fiscal 2022 at +1.8% vs +1.6% in Oct.

Board's core CPI median forecast for fiscal 2020 at -0.5% vs -0.6% in Oct.

Board's core CPI median forecast for fiscal 2021 at +0.5% vs +0.4% in Oct.

Board's core CPI median forecast for fiscal 2022 at +0.7% vs +0.7% in Oct.

• USD/JPY sees little action after BOJ's status rate decision, downgrade of economic assessment