|
 He also said Japan's inflation can accelerate toward the central
bank's 2 percent target even if economic growth remained weak as
long as job markets continued to tighten, suggesting that no
immediate monetary easing was forthcoming.
"The broad price trend is improving steadily and I don't see any big
problem for now. Inflation expectations, which play a key role in
achieving our price target, remain stable as a whole," Kuroda told
reporters after meeting with business leaders in Osaka, western
Japan, on Monday.
Kuroda, however, reiterated his readiness to expand the BOJ's
massive stimulus program further if the central bank is in danger of
missing its price target, to conclusively break free of a long phase
of debilitating deflation.
Japan's core consumer prices fell 0.1 percent in the year to August,
marking the first annual drop since the central bank deployed its
massive stimulus program more than two years ago.
The BOJ has held steady since expanding its stimulus program in
October last year, but the lack of inflation and weak economic
growth has kept alive some expectations that it will increase the
stimulus doseage again as early as next month.
Kuroda was upbeat on the outlook for global growth, saying that the
strength in advanced economies will make up for weakness in China
and other emerging nations.
The fact the U.S. Federal Reserve was eyeing an interest rate hike
in the near future showed the strength of the U.S. economy, which
was positive for the global economy, Kuroda said.
"Fears that U.S. rate normalization would trigger a massive, sharp
outflow of funds from emerging economies and disrupt the global
economy appear to be receding somewhat," he said.
WEAK YEN A DOUBLE-EDGED SWORD
Japan's economy shrank in April-June and analysts expect only a
modest rebound in the current quarter, as China's slowdown and
rising import costs hurt exports and household spending. Some
analysts even project another contraction in July-September, tipping
the economy into a technical recession.
[to top of second column] |
Kuroda said it was still unclear whether Japan suffered another
contraction in July-September and stressed that as long as job
markets continued to tighten, companies will gradually raise wages
and help boost private consumption.
"More companies appear to be able to pass rising costs onto sales
prices. Households have started to accept such price hikes on
prospects of rising wages," he said.
Turning to currency matters, Kuroda said that while a weak yen
helped boost exports and manufacturers' profits, it also hurt
smaller firms and households by increasing import costs.
"Exchange rates ought to move in a way reflecting economic
fundamentals. I think that understanding is shared by policymakers
of Group of Seven leading economies," Kuroda said.
(Reporting by Leika Kihara; Editing by Shri Navaratnam and Simon
Cameron-Moore)
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