BOJ Debated Risks From Supply Constraints And China’s Slowdown – September Summary

TOKYO, Oct. 1 (Reuters) – Policymakers at the Bank of Japan (BOJ) in September saw increased risks to the economy from slowing Chinese growth, semiconductor shortages and plant closures in Southeast Asia, a summary of views expressed in their monthly rate review revealed Friday.

Such an intensification of external risks could affect the BOJ’s new quarterly growth projections, expected at its next policy-making meeting on October 27-28.

“Exports and production continue to increase. But we need to carefully monitor the impact of chip shortages and disruptions at parts factories in Southeast Asia on capital spending and corporate financing,” said a board member in the summary.

“There are signs that the Chinese economy is slowing even as the global economy continues to recover as a trend,” according to another opinion presented in the summary.

While most policymakers maintained the economy was heading for a moderate recovery, one said it would be temporarily affected by supply constraints and continued weakness in retail sentiment due to of the coronavirus pandemic, according to the summary.

“It is important to maintain a mix of (expansionary) fiscal and monetary policy even as the economy emerges from the pandemic slump and begins to normalize,” a board member said.

At the September 21-22 meeting, the BOJ kept its monetary policy stable, but lowered its assessment of exports and production, reflecting the growing impact of Asian factory closures and supply constraints. Read more

Reporting by Leika Kihara; Editing by Christopher Cushing and Kenneth Maxwell

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