Customers exit a Spinns fashion store in Tokyo. Bank of Japan governor Haruhiko Kuroda said yesterday consumer inflation may exceed the central bank’s projection in the fiscal year that ended in March.
Bank of Japan governor Haruhiko Kuroda said consumer inflation may exceed the central bank’s projection in the fiscal year that ended in March, voicing confidence the world’s third-largest economy continues to make headway in meeting its price target.
Deputy governor Hiroshi Nakaso added to the optimism, stressing that Japan can withstand the pain from a sales tax hike that kicked off this month as companies are increasing hiring and wages due to brighter prospects for the economy.
“I think consumer inflation was actually slightly higher in fiscal 2013 than our current projection of 0.7%,” Kuroda told a parliamentary session yesterday.
“For now, we can say Japan is making steady progress toward achieving 2% inflation.”
His remarks suggest the BoJ will revise up the previous fiscal year’s price forecast and maintain its bullish projections for subsequent years in its twice-yearly outlook report due out next week.
But both Kuroda and Nakaso reiterated the BoJ’s readiness to “adjust policy” with additional monetary stimulus should risks threaten achievement of the price target.
“There are various ways to adjust policy. We will decide what among these measures is appropriate depending on economic and price developments at the time,” Kuroda said.
Japan’s economic growth has slowed since late last year and analysts warn of further weakness in coming months as exports lack momentum and the sales tax hike cools household spending.
But the BoJ has maintained its view Japan’s economy will recover moderately despite the pain from the sales tax increase, suggesting that no immediate easing was on the horizon.
