Bank of Japan Gov. Haruhiko Kuroda said he would scrutinize various factors, including the effect of global market turbulence on Japan’s inflation expectations, in deciding whether additional monetary easing was necessary.
“Japan’s underlying price trend isn’t deteriorating. But some indicators on inflation expectations have been somewhat weak,” Kuroda told reporters at the World Economic Forum in Davos on Saturday, adding he would carefully watch how recent global market turbulence affects Japan’s economy and prices, Reuters reported.
“We won’t hesitate adjusting policy, including easing policy, if necessary to achieve our 2% price target,” he said. Kuroda, however, did not comment on whether the BOJ would ease policy at next week’s rate review.
In a panel session he attended before speaking to reporters, Kuroda said there was no limitation to the BOJ’s policy tools if it were to expand monetary stimulus.
“I don’t think there is any technical limitation to further strengthen our quantitative and qualitative easing program if necessary to achieve our 2% target,” he said.
Markets are simmering with speculation the BOJ may expand stimulus this week, as the effect of slumping oil prices will likely force it to cut its inflation forecast for the coming fiscal year below 1%, sources told Reuters.
Asked by reporters whether he felt additional monetary easing was necessary at this stage, Kuroda said: “We’re looking at various data ... and analyzing them. I can’t say anything more, such as whether we would do anything [this week] or not.”
Kuroda said that while falling oil prices were generally positive for the global economy, the pain they inflict on emerging economies warranted attention.
“When markets are moving this sharply, they could affect emerging markets and resources-exporting economies. That’s a risk to the outlook,” he said.
