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TOKYO (Reuters) -Bank of Japan board member Goushi Kataoka said on Thursday the coronavirus pandemic may weigh on the economy longer than initially expected, warning of heightened risks to the central bank’s forecast of a moderate, export-driven recovery.
While Japan’s economy is likely to recover as a trend, the outlook was bound with uncertainty with consumption expected to remain in a “severe state” due to state of emergency curbs to deal with the pandemic, Kataoka said.
“Risks to consumption are heightening,” with a spike in new Delta variant cases forcing Japan to maintain curbs on economic activity, he said in a speech. “There’s a good chance the impact of the pandemic may last longer than expected.”
An advocate of aggressive monetary easing, Kataoka has been a consistent, sole dissenter to the BOJ’s decision to keep its interest rate targets unchanged.
Kataoka repeated his calls for the BOJ to ramp up government bond buying to push down borrowing costs for companies, so they can boost capital expenditure and invest in growth areas.
“Personally, I believe the BOJ must strengthen monetary easing” as inflation will remain distant from the bank’s 2% target for years even if the economy were to recover, he said.
