The coronavirus shock is boosting the amount of money flowing into Japan’s economy and may fire up inflation, achieving what years of ultra-loose monetary policy failed to do, the central bank’s former top economist, Hideo Hayakawa, said on Tuesday.

The Bank of Japan has been printing money aggressively for years as part of a policy of quantitative easing, hoping to spur consumption in the world’s third biggest economy and reach an elusive inflation target of 2 percent.

But most of the money piled up in financial institutions’ reserves instead of spreading out across the economy, as risk-averse Japanese firms stayed wary of boosting spending.

After COVID-19 struck, however, the money printed by the BOJ is trickling down to households and companies, as the government ramps up spending and commercial banks boost lending to cash-strapped firms, said Hayakawa.

“Money is flowing into companies and households, leading to a surge in savings,” Hayakawa, whose views are closely tracked by incumbent policymakers, said. “Consumption could boom once the pandemic subsides, pushing up growth and inflation.”

Even if that scenario is not reached for years, policymakers should not assume that persistent deflation will cap bond yields, allowing Japan to run a huge fiscal deficit at low cost forever, he said.

“There’s a strong belief among Japanese policymakers that prices will never perk up, and so it’s okay to keep running a huge fiscal deficit,” said Hayakawa, who is now a senior fellow at the Tokyo Foundation for Policy Research.

“But you never know how COVID-19 could affect prices. The biggest fear for the BOJ is a steady rise in inflation,” he said, adding that such an increase would force the bank to consider whittling down stimulus without sparking an unwelcome spike in yields.

Bank lending has hit a record high in recent months as companies hoarded cash to tide over the sweeping impact of the pandemic.

Deposits also rose to a record 786 trillion yen ($7.4 trillion) in June and surged 8.3 percent in July from a year earlier, as households saved some of the cash doled out by the government in its steps to cushion the disease blow.

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