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Japan's economy recovering despite waning demand: BOJ chief

Xinhua, April 7, 2016 Adjust font size:

Bank of Japan Governor Haruhiko Kuroda said on Thursday the nation's economy is on a moderate recovery trend while maintaining the central bank stood poised to take further monetary easing measures if necessary.

While noting that a slowdown in international demand for Japanese goods had hurt exports and production, the mainstay of the world's third-largest economy, the central bank chief maintained his consistently upbeat view that the economy is improving.

"Japan's economy continues to recover moderately as a trend, although some weaknesses are seen in exports and output," Kuroda said during a quarterly meeting with regional branches of the bank.

Despite inflation remaining flat as the BOJ's already delayed 2 percent target in two years looms ever-closer, and the bank plunging its interest rates into negative territory in January in an unprecedented move in Japan, coupled with data showing output, demand and consumption is charting a downward trajectory and the Cabinet Office saying Wednesday the economy is in a recessionary phase with its leading indicator dropping to the lowest level in four years, the BOJ chief said he expects the economy to expand moderately.

With the yen rising to levels not seen in a year-and-a-half overnight versus the U.S. dollar in New York, as investors dumped the dollar, riskier assets including stocks, and piled into the yen as a safe haven, as the U.S. Federal Reserve remains dovish on the future pace of interest rate hikes, Kuroda said that Japan's financial system is "maintaining stability."

And while consumer inflation is likely to hover around zero for the time being, the central bank chief said that it would "accelerate towards 2 percent," without providing specifics.

He said the bank would continue to maintain additional easing measures along with its negative rate for as long as necessary to achieve the bank's reflation target "in a stable manner," adding that additional steps would be taken, if needed, by increasing asset buying or further lowering the BOJ's interest rates. Endit