BOJ sees strong support for rebound
Reuters in Tokyo
Japan's economic recovery will be further supported by an improving job market and a pickup in overseas economies, Bank of Japan (BOJ) governor Haruhiko Kuroda said yesterday as he vowed to maintain ultra-loose policy as long as was needed to defeat deflation.
He stressed the bank would not consider it a success to simply lift inflation to 2 per cent, a target it adopted this year, but rather wanted to entrench expectations of sustained price rises.
"We need to ensure 2 per cent inflation is firmly entrenched in the public's mindset and that people act based on the assumption prices will rise at 2 per cent," Kuroda said. "Japan seeing 2 per cent inflation just temporarily isn't enough. That level needs to be sustained stably. That means long-term inflation expectations, not just underlying consumer inflation, must reach 2 per cent."
To ensure the economy's recovery remained on track after 15 years of deflation, he said the central bank would use massive bond purchases to keep borrowing costs low as long as needed.
Kuroda did not directly comment on the US Federal Reserve's surprise decision on Wednesday not to start tapering its monetary stimulus. But he did say central banks in advanced nations faced a difficult task in trying to anchor inflation expectations and stimulate their economies.
He also acknowledged that recent market instability, in part caused by speculation over the timing of the Fed's tapering, had hurt growth of some emerging economies.
Still, his overall assessment of overseas economies was positive, pointing to signs of improvement in US household spending and housing markets, which would help Japan.