BOJ to cut 2021 growth forecast as coronavirus curbs hurt outlook – Reuters

In its latest quarterly projections due to be published next week, the Bank of Japan (BOJ) is seen cutting the growth forecasts for the fiscal year 2021/22, as another state of emergency for Tokyo risks negatively affecting consumption, Reuters reports, citing four sources familiar with the central bank’s thinking.

Additional takeaways

“But the central bank is likely to maintain its view the world’s third-largest economy is headed for a moderate recovery as robust exports and output offset some of the weakness in consumer demand.”

“The foundations of a recovery are in place, but the timing may be delayed somewhat, as the curbs weigh on the economy’s expected to rebound in the current quarter.”

“In the new estimates, the BOJ will likely revise up this fiscal year’s consumer inflation forecast mainly reflecting the boost from recent rises in energy costs.”

This comes after the Japanese Prime Minister Yoshihide Suga officially declared a state of emergency for Tokyo just two weeks ahead of the Olympics.  Tokyo reported 920 new infections on Wednesday, the most since May 13.

USD/JPY breaches 110.00

Despite reports of Japan’s economic growth forecasts downgrade, the yen is on the rise amid intensifying risk-off mood due to mounting coronavirus concerns.

At the time of writing, USD/JPY is down 0.62% at 109.96, having hit the lowest levels in two weeks at 109.75 earlier on.