BoJ signals bleaker view of Japan's economy after quake

Bank of Japan Governor Masaaki Shirakawa said the country's economy is in a severe state after a devastating earthquake on March 11, suggesting that the central bank may paint a bleaker view of the economy at its next rate review.
The government kept its economic assessment unchanged in a monthly report released on Wednesday but estimated the direct damage from the deadly earthquake and tsunami that struck the country's north-east at as much as $310 billion, making it the world's costliest natural disaster.
Shirakawa offered no clues on whether the BoJ would take further easing steps at the next rate review on April 6-7 but signalled that the pain for the fragile economy would be severe.
"The BoJ fully understands that Japan's economy is in a severe state. We hope to meet our mandate with a sense of urgency," he told parliament on Thursday. The BoJ last week eased monetary policy and signalled it would be ready to act further once it has scrutinised data offering additional clues on the quake's damage to the economy.
The central bank is lining up its options for what more it can do to support growth, although further actions would depend largely on how markets - and especially the yen - perform.
Before the quake, the BoJ had said it expected Japan's economy to emerge from a lull and resume a moderate recovery around spring, on support from solid exports to Asia and a pickup in output.
But with the quake and power outages disrupting factory output and the distribution of goods, the BoJ is likely to issue a more cautious view on the economy, or at least on its outlook, when its board next meets. The BoJ has two scheduled policy-setting meetings next month, on April 6-7 and April 28, with the latter also due to issue its long-term economic and price forecasts. Analysts say there is a good chance the BOJ will ease policy again next month.