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BOJ Kuroda says he sees no immediate need to ease again
[TOKYO] Bank of Japan Governor Haruhiko Kuroda said on Wednesday he saw no immediate need to expand monetary stimulus again with inflation heading up towards his 2 per cent target-despite temporary pressure from slumping oil prices.
He stressed the BOJ's resolve to ease policy further if such an uptrend was disrupted by risks such as a weakening economy or continuing decline in oil prices.
"I don't think there is any change in the price trend at the moment. That's why I don't think there is a need to do something additional," Mr Kuroda told a news conference after a rate review. "If there is any change in the price trend, we won't hesitate to adjust policy."
Mr Kuroda made the remarks after the BOJ, as widely expected, maintained its stimulus programme that pledges to print money at an annual pace of 80 trillion yen (US$675 billion).
The BOJ also revised up its view on exports and output, even as data showing only a feeble recovery from recession tempers its optimism.
On Monday data confirmed the economy pulled out of recession in fourth-quarter 2014 but annualised growth of 2.2 per cent was much weaker than expected, underscoring the lingering impact from a sales tax hike last April.
Still, the BOJ stuck to its view that the economy is recovering moderately, and on track to hit 2 per cent inflation next fiscal year as companies raise wages and spending.
Core consumer inflation was just 0.5 per cent year-on-year in December excluding the effects of April's sales tax hike. Including the 3 percentage point hike in the sales tax rate, core inflation was 2.5 per cent.
A much-awaited rebound in exports has offered some hope for BOJ policymakers, who prefer to hold off on expanding stimulus for now, even as falling oil prices anchor inflation below the BOJ's 2 per cent target.
"Industrial output is picking up," the BOJ said in a statement issued after the meeting. That was a brighter view than last month, when it said output was "bottoming out." It also revised up its view on exports to say they were "picking up," which compared with last month's assessment that they were showing signs of a pick-up.
But the rebound in private consumption has been weaker than expected, leading to criticism that the BOJ's radical stimulus was to blame for souring household sentiment by weakening the yen and driving up import costs.
"As long as exchange rates move stably in a way that reflects economic fundamentals, they shouldn't be negative for the economy," Mr Kuroda said, brushing aside the view that the weak yen was doing more harm than good to the economy.