Exclusive: BOJ to offer brighter view on economy, output on signs of pick-up - sources

FILE PHOTO: A man wearing a protective mask walks past the headquarters of Bank of Japan amid the coronavirus disease (COVID-19) outbreak in Tokyo, Japan, May 22, 2020.REUTERS/Kim Kyung-Hoon/File photo

TOKYO (Reuters) - The Bank of Japan is expected to offer a brighter view next week on the economy, output and exports than in July to signal that they are starting to recover from the devastating impact of the coronavirus pandemic, sources familiar with its thinking said.

But the BOJ will warn at its rate review that any recovery will be modest and bound with uncertainty, as fears over a renewed spike in infections and fragile global demand weigh on household and corporate spending, the sources said.

“It’s clear the economy is bouncing back from a severe downturn in April-June, which was blamed largely on lock-down measures to contain the pandemic,” one of the sources said, a view echoed by two other sources.

The BOJ is set to keep monetary policy steady at the rate review, after having ramped up stimulus twice this year to cushion the economic blow from the pandemic.

On the current state of the economy, the central bank is likely to say that while conditions remain severe, there are some signs of a pick-up, according to the sources.

The view would be more upbeat than the assessment made in the BOJ’s previous meeting in July, when it said the economy remained in an “extremely severe state.”

The central bank is also expected to describe exports and output as recovering, compared with the July assessment that they were “falling sharply,” the sources said.

Reporting by Leika Kihara and Takahiko Wadao; Editing by Kim Coghill