It is not every day that a central bank sounds alarmist. Their role is to serve a calming role in the markets.
But today's release of minutes from the 27 April 2020 monetary policy meeting at the Bank of Japan is nothing short of alarmist:
Across six pages, the meeting summary references an increasingly "severe situation" at least five times and warns once of the need to "avoid a second Great Depression."
As the world tentatively pivots towards a partial reopening and holds its breath hoping to avoid new hospitalization spikes. it is tempting to believe that we have turned a corner. It is tempting to believe that the words above --articulated three weeks ago -- may soon be out-dated.
However, the reality is that it will take quite some time to rebuild shattered supply chains and potentially longer to resurrect consumer demand beyond necessities and IT/connectivity. The Bank of Japan's assessment at a minimum provides a cautionary tale and fodder for responsible scenario analysis.