Haruhiko Kuroda, the Governor of the Bank of Japan, has warned of uneven financial recovery from the recession triggered by the Covid-19 pandemic. The post-pandemic period will witness a widening gap between the rich and the poor as an increase in savings and indebtedness is likely to happen.

“The trio of increased savings, inequality, and debt is considered to be intertwined in practice and may theoretically reduce the natural interest rate,” Kuraoda said in a speech at an academic conference.

“The nature of the policy responses will shift from temporary first aid measures to medium-to-long-term structural policies,” Kuroda added. He also hinted that the Central Banks around the globe would move towards keeping the companies afloat as the world economy will rise. As the inflation rates rise, banks would keep the monetary policies flexible. This shall ensure that the rebound after the slump is as evenly spread as possible.

Banks are looking towards moving away from crisis mode and facilitate a fresh influx of money into the economy. Liquidity support will continue as it has been.

The health crisis has led to widespread digitalization, whose benefits are limited to certain sections of the society, and the disconcert among the masses is likely to aggravate as the gap between the rich and the poor will widen. Inequality is bound to pose fresh challenges to global policymakers as concerns over climate change have also started aggravating.

Bizemag

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