Bank of Japan Governor Haruhiko Kuroda said he remains on standby to adjust monetary policy if needed after the policy board on Wednesday maintained record stimulus.
With underlying price trends unchanged in the world’s third-largest economy, Kuroda said further action at this point was unnecessary. The BOJ kept a pledge to boost the monetary base at an annual pace of 80 trillion yen ($670 billion), as forecast by economists, Bloomberg said.
A pickup in exports that’s supporting production reduces the urgency for additional easing even as inflation is poised to slow further as the slump in oil prices filters through the economy. The central bank will continue to monitor risks to achieving its 2 percent price target, Kuroda said.
“As lower oil prices weigh on inflation, there will be mounting pressure on the BOJ to expand policy further,” said Naomi Muguruma, an economist at Mitsubishi UFJ Morgan Stanley Securities Co. “Kuroda will be quick once he recognizes the need for action.”
The central bank may have to ease further in October, Muguruma said, while other economists have predicted a move as early as April.
Kuroda said movements in the yen aren’t bad for Japan’s economy as long as they reflect fundamentals. It’s desirable for exchange rates to be stable and reflect fundamentals, he said.
The tumble in energy prices contributed to a slowdown in the central bank’s main inflation gauge to 0.5 percent in December, below the 2 percent target that Kuroda aimed to reach in about two years when he began record asset purchases in April 2013.
