TOKYO (Reuters) - Bank of Japan Governor Haruhiko Kuroda said on Thursday that the central bank would ease policy further without hesitation if the momentum towards its 2% inflation goal came under threat, a sign of his readiness to top up its already massive monetary stimulus.
Speaking at an annual meeting of Japan’s largest business lobby, Keidanren, however, Kuroda also offered somewhat brighter view on the global economic outlook, bolstering the market view that the BOJ would not rush to alter its current policy for now.
“While continuing to carefully examine various risks, the BOJ will not hesitate to take additional easing measures if there is a greater possibility that the momentum towards achieving the price stability target will be lost,” he said.
Kuroda made the remark a week after the central bank kept its target for short-term rates at -0.1% and that for 10-year bond yields around 0%, and it stuck to its assessment that the trend in Japan’s economy was for continued moderate growth.
Stability in financial markets and some signs that strains on global economy were reducing have bolstered the view that the central bank will avoid easing or tightening policy for the time being.
“Uncertainties over the global economy, including developments in U.S.-China trade negotiations, have eased somewhat,” Kuroda said.
Still, “the BOJ considers that downside risks regarding the outlook for the global economy remain significant.”
Kuroda gave few clues on Thursday as to what the BOJ would do next.
Years of heavy money printing have failed to fire up inflation to the BOJ’s 2% target, forcing it to keep super-low rates despite the damage inflicted on financial institutions’ profits.
The world’s third-largest economy grew an annualised 1.8% in July-September due to resilient domestic demand, but economists see a contraction in the current quarter as the October’s sales tax hike dampened consumer spending.
Kuroda said the 13.2 trillion yen ($120 billion) spending package the government has rolled out can help spur growth backed by the BOJ’s powerful easing.
($1 = 109.5500 yen)
Reporting by Tetsushi Kajimoto; Editing by Chang-Ran Kim & SImon Cameron-Moore