BOJ Confirms Positive Assessment of Economy Despite Weak Data

Bank of Japan Governor Haruhiko Kuroda came out fighting on Friday, giving a spirited defence of the economy’s performance after a run of weak data, and reiterated his readiness to expand stimulus if inflation faltered on the path to his 2 percent target rate.

“The BOJ is not aiming at achieving the price stability target of 2 percent temporarily. What it aims at is to achieve an economy in which inflation is about 2 percent on average year after year,” he said, signalling that the central bank will not exit from its ultra-loose stimulus any time soon.

“I would like to emphasize that…given the BOJ’s clear and strong commitment to the 2 percent inflation target, it is a matter of course the BOJ will make adjustments if necessary to ensure the target is met,” he said at a seminar.

 
He stressed that the BOJ will vigilantly monitor how a decline in real income affects consumer spending.

Kuroda said an increase in summer bonus payments to workers would help consumer spending recover from an increase in the sales tax in April, while labour and supply constraints meant companies were expected to keep raising wages.

“A positive cycle of output, income and expenditure is firmly in place, so we can say Japan’s economy continues to recover moderately as a trend.”

There were signs, he said, that companies were ready to increase domestic investment after holding back spending on plant and equipment during a prolonged period of deflation.

via Reuters

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza