By Leika Kihara
TOKYO (Reuters) – The total amount of money circulating in Japan increased at the slowest annual rate in 19 months in November, as businesses and households have less need to accumulate money with the emerging economy of the initial shock caused by the COVID-19 crisis.
The data highlights how the Japanese economy is normalizing from last year’s pandemic crisis, and will likely be part of the data the Bank of Japan examines during next week’s debate on whether to phase out programs for pandemic relief fund.
Japan’s M2 money supply, a measure of the total amount of money available in the economy, rose 4.0% in November from a year earlier, Bank of Japan data showed on Thursday, slowing from a 4.2% gain in October. This is the smallest annual increase since a 3.7% gain in April last year.
The average amount of cash, at 1,175.8 trillion yen ($ 10.34 trillion), reached a new high, as the central bank continued to print money to cushion the economic blow of the pandemic .
“The money supply balance remains at historic levels, with the slowdown largely a reaction to last year’s surge. There is no big change in the uptrend (of the money supply), ”a BOJ official said in a briefing.
The BOJ has stepped up its purchases of corporate bonds and commercial paper and last year introduced a loan program aimed at channeling funds to small businesses through financial institutions to address the liquidity shortage caused by the pandemic.
The recent release of the new Omicron variant complicates the BOJ’s decision, which is expected to come as soon as next week’s rate review, on whether to phase out the programs when they reach their current maturity in March 2022.
($ 1 = 113.7300 yen)
(Reporting by Leika Kihara; Editing by Sam Holmes)