World News

Kuroda says BOJ will be ‘fully prepared’ to act on virus risk

By Leika Kihara

RIYADH (Reuters) – The Bank of Japan will be fully prepared to take necessary action to mitigate the impact of the coronavirus on the world’s third-largest economy, its Governor Haruhiko Kuroda said.

Kuroda said there was no major change to the BOJ’s projection that Japan’s economy would keep recovering moderately thanks to an expected rebound in global growth around mid-year.

He also repeated the view that, while the central bank stands ready to ease monetary policy further “without hesitation”, it saw no immediate need to act.

But Kuroda said the BOJ would scrutinize developments on the virus outbreak carefully, since the damage to Japan’s economy could be profound if the epidemic is prolonged and disrupts supply chains.

“If the outbreak persists, it could have a big impact on the Japanese and global economies,” Kuroda told a news conference on Sunday after attending a meeting of G20 finance leaders.

“We’ll ensure we are fully prepared to take all necessary measures”, working closely with global institutions, he added.

The epidemic has cast a cloud over global recovery prospects, overshadowing a meeting of finance leaders of the Group of 20 (G20) top economies in Riyadh.

The International Monetary Fund offered a sober presentation to the finance leaders, predicting the epidemic would shave 0.1 percentage points off global growth.

If the damage to global growth can be contained to levels the IMF projects there was no need to alter the BOJ’s view that the world economy would pick up around mid-year, Kuroda said.

“For now, I don’t think we need to sharply change our baseline scenario, including for Japan’s economy, to one projecting a downward spiral in growth or a delay in the timing of a recovery,” Kuroda said. “But it’s true the situation is uncertain.”

(Reporting by Leika Kihara; Writing by Saeed Azhar; Editing by Jan Harvey and Alex Richardson)