BOJ's Kuroda flags more easing if virus impact worsens: Sankei

FILE PHOTO: Bank of Japan Governor Haruhiko Kuroda speaks at a news conference in Tokyo, Japan, January 21, 2020. REUTERS/Kim Kyung-Hoon/File Photo

TOKYO (Reuters) - Bank of Japan Governor Haruhiko Kuroda said the central bank would consider additional rapid easing if the coronavirus outbreak significantly threatened Japan’s economy and price trends, the Sankei newspaper reported on Monday.

“We would need to consider monetary policy steps if (the virus outbreak) significantly affects Japan’s economy,” Kuroda was quoted as saying in an interview with the daily.

Kuroda called the coronavirus outbreak the “biggest uncertainty” for the domestic economy and flagged “additional easing steps without hesitation” if the economic risks from the virus heightened, Sankei said.

The virus has killed more than 1,700 people in China, and it has already taken a toll on China’s economy - Japan’s largest trading partner - hampering supply chains for car manufacturers to smartphone makers and causing the number of Chinese shoppers visiting Japan to plunge.

Japan’s economy - the world’s third-largest - shrank at the fastest pace in six years in the December quarter as domestic demand took a hit from the sales tax hike, underscoring the fragile nature of an economy teetering on the brink of a recession.

Kuroda played down the possibility that global and Japanese economic growth in 2020 would significantly lag last year’s and echoed views that China’s domestic output would bottom out this quarter and recover from April.

However, he said much depended on when the outbreak would peak, adding that it took six months for the SARS outbreak in 2002-2003 to be resolved.

Many market players expect the BOJ to stand pat on monetary policy for the foreseeable future, barring big economic shocks and a spike in the yen sharp enough to derail a fragile economy.

Reporting by Tetsushi Kajimoto and Kaori Kaneko; Editing by Chang-Ran Kim and Sam Holmes