The Bank of Japan is likely to maintain this month its projection that the economy will gradually recover from the damage wrought by the coronavirus pandemic in the latter half of this year, sources said.
Such a view would reinforce market expectations that it will forgo bold monetary easing steps at its June rate review, after the BOJ and the government unveiled a slew of support measures for businesses in the last few months.
But it would contrast with the European Central Bank's move on Thursday to offer a bigger-than-expected expansion of its stimulus package to prop up the economy.
The BOJ's optimism reflects its growing conviction that the world's third-largest economy hit bottom in April or May, when lockdown steps kept citizens home and businesses shut, said four sources familiar with the central bank's thinking.
"There aren't enough factors that would force the BOJ to alter its view the economy will emerge from the doldrums in latter half of this year as the pandemic subsides," one of the sources said, a view echoed by three other sources.
That stance would reduce the likelihood of interest rate cuts or a massive increase in asset purchases at the BOJ's June 15-16 rate review.
Still, many central bankers warn of risks that could slow the pace of recovery, such as a renewed spike in infections, rising job losses and a bigger-than-expected slump in emerging economies.
"The April-June quarter is probably the bottom for Japan's economy. But the slump in growth may become bigger and the rebound slower than initially thought," a second source said.
Fund aid, not stimulus
The BOJ eased monetary policy for two straight months in April, joining government efforts to cushion the blow from the pandemic on an economy already sliding into deep recession.
Steps so far have focused on easing corporate funding strains, such as increased purchases of corporate debt and the creation of lending facilities to help small firms.
While its US and European counterparts are shifting from crisis response towards steps to reflate growth, the BOJ remains wary of using tools directly aimed at stimulating demand - such as rate cuts - too hastily, the sources said.
That means the BOJ's most likely option, even if it were to act in coming months, would be to expand its lending facility or take new steps to ease stress on companies, they said.
"There's no point trying to stimulate the economy now when the government is still asking people to stay home as much as possible to contain the pandemic," a third source said.
Prime Minister Shinzo Abe announced a state of emergency in April requesting citizens to stay home and businesses to close, hammering an economy that was already suffering from the hit from a sales tax hike last year and the US-China trade war.
While Japan lifted lockdown measures in May, analysts expect the economy to contract by an annualised 22 per cent in the current quarter and recover only modestly in the second half of this year.
"Japan's economy will rebound in July-September if there's no renewed spike in infections. Even so, it may take until 2023 or 2024 for the economy to climb back to levels before the pandemic hit," said Yoshiki Shinke, chief economist at Dai-ichi Life Research Institute.
"The BOJ may not need to act now. But if job losses start to spike, it may come under pressure to loosen policy again."
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Profile of Bitex UAE
Date of launch: November 2018
Founder: Monark Modi
Based: Business Bay, Dubai
Sector: Financial services
Size: Eight employees
Investors: Self-funded to date with $1m of personal savings
The Perfect Couple
Starring: Nicole Kidman, Liev Schreiber, Jack Reynor
Creator: Jenna Lamia
Rating: 3/5
UAE currency: the story behind the money in your pockets
Fixtures
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What is a black hole?
1. Black holes are objects whose gravity is so strong not even light can escape their pull
2. They can be created when massive stars collapse under their own weight
3. Large black holes can also be formed when smaller ones collide and merge
4. The biggest black holes lurk at the centre of many galaxies, including our own
5. Astronomers believe that when the universe was very young, black holes affected how galaxies formed
UAE currency: the story behind the money in your pockets
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Various Artists
Habibi Funk: An Eclectic Selection Of Music From The Arab World (Habibi Funk)
THE CLOWN OF GAZA
Director: Abdulrahman Sabbah
Starring: Alaa Meqdad
Rating: 4/5
MATCH INFO
Uefa Champions League semi-finals, first leg
Liverpool v Roma
When: April 24, 10.45pm kick-off (UAE)
Where: Anfield, Liverpool
Live: BeIN Sports HD
Second leg: May 2, Stadio Olimpico, Rome
Scoreline
Saudi Arabia 1-0 Japan
Saudi Arabia Al Muwallad 63’
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Conflict, drought, famine
Estimates of the number of deaths caused by the famine range from 400,000 to 1 million, according to a document prepared for the UK House of Lords in 2024.
It has been claimed that the policies of the Ethiopian government, which took control after deposing Emperor Haile Selassie in a military-led revolution in 1974, contributed to the scale of the famine.
Dr Miriam Bradley, senior lecturer in humanitarian studies at the University of Manchester, has argued that, by the early 1980s, “several government policies combined to cause, rather than prevent, a famine which lasted from 1983 to 1985. Mengistu’s government imposed Stalinist-model agricultural policies involving forced collectivisation and villagisation [relocation of communities into planned villages].
The West became aware of the catastrophe through a series of BBC News reports by journalist Michael Buerk in October 1984 describing a “biblical famine” and containing graphic images of thousands of people, including children, facing starvation.
Band Aid
Bob Geldof, singer with the Irish rock group The Boomtown Rats, formed Band Aid in response to the horrific images shown in the news broadcasts.
With Midge Ure of the band Ultravox, he wrote the hit charity single Do They Know it’s Christmas in December 1984, featuring a string of high-profile musicians.
Following the single’s success, the idea to stage a rock concert evolved.
Live Aid was a series of simultaneous concerts that took place at Wembley Stadium in London, John F Kennedy Stadium in Philadelphia, the US, and at various other venues across the world.
The combined event was broadcast to an estimated worldwide audience of 1.5 billion.
GAC GS8 Specs
Engine: 2.0-litre 4cyl turbo
Power: 248hp at 5,200rpm
Torque: 400Nm at 1,750-4,000rpm
Transmission: 8-speed auto
Fuel consumption: 9.1L/100km
On sale: Now
Price: From Dh149,900
SPECS
%3Cp%3EEngine%3A%20Twin-turbocharged%204-litre%20V8%3Cbr%3EPower%3A%20625%20bhp%3Cbr%3ETorque%3A%20630Nm%3Cbr%3EOn%20sale%3A%20Now%3Cbr%3EPrice%3A%20From%20Dh974%2C011%3C%2Fp%3E%0A
LOVE%20AGAIN
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Company Profile
Name: Thndr
Started: 2019
Co-founders: Ahmad Hammouda and Seif Amr
Sector: FinTech
Headquarters: Egypt
UAE base: Hub71, Abu Dhabi
Current number of staff: More than 150
Funds raised: $22 million
Ponti
Sharlene Teo, Pan Macmillan
The five pillars of Islam