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MNI (London)
     TOKYO (MNI) - Bank of Japan Governor Haruhiko Kuroda said Wednesday that
downside risks to overseas economies are strengthening and the BOJ must
carefully watch for any impact on domestic firms' and households' sentiment.
     Kuroda told reporters that the BOJ will conduct additional easy policy if
needed, although he didn't elaborate on what kinds of further policy the BOJ
would undertake.
     Earlier in the day, the BOJ kept monetary policy unchanged, maintaining the
view that Japan's economy is expanding moderately despite emerging downside
risks. The BOJ vowed to keep the current easy policy "for an extended period of
     In the quarterly Outlook Report, published alongside the meeting outcome,
the BOJ revised down its inflation projection for fiscal 2019 to 0.9% from the
1.4% presented in October. The downgrade came following a run of weaker than
expected price data and downward pressure from the fall in crude prices on
consumer prices.
     The BOJ board also lowered the median inflation rate forecast for fiscal
2020 to 1.4% from 1.5% made in October. They maintained their assessment that
the momentum toward achieving the 2% price target is maintained, although it
isn't sufficiently firm and it remains vigilant against the outlook for
inflation rate, saying, "Risks to both economic activity and prices are skewed
to the downside."
     Other key points from Kuroda's presser:
     --"Downside risk to overseas economies is strengthening." But Kuroda said
he doesn't see the economic evidence or "hard economic data" that will prompt
the BOJ to change the baseline scenario that Japan's economy is likely to expand
moderately now. "Japan's economy is likely to continue on an expanding trend
through fiscal 2020," he said.
     --The downward revision of the board's inflation projection in fiscal 2019
is due mainly to the impact of the fall in crude oil price. "The drop in
(Japan's) prices to be caused by the drop in crude oil prices is be temporary."
The inflation projection in fiscal 2019 was revised down to +0.9% from +1.4%
made in October.
     --When asked about the impact of lower consumer prices on inflation
expectations, Kuroda said the impact may not be as big as seen in 2014 and 2015.
     --"The recent drop in crude oil prices is different from the big drop" seen
2014 and 2015 and the recent drop is temporary. But the BOJ needs to keep a
close eye on inflation expectations as the bank sees large downside expectation
     --"It takes time to achieve the 2% price target and (the BOJ) ensures the
sustainability of easy policy" to achieve the price stability target. The BOJ
"needs to keep a positive output gap as long as possible to achieve the 2% price
     --The momentum toward achieving the 2% price target is maintained as the
output gap continues improving and medium- to long-term inflation expectations
have been changed.
     --Global financial markets, especially stock prices and foreign exchange
rates, earlier this year were relatively unstable but the corporate profit
outlook remains solid in Japan and the U.S. "economic fundamentals didn't change
and the markets seemed to have overreacted to the outlook view."
--MNI Tokyo Bureau; tel: +81 90-2175-0040; email:
--MNI London Bureau; tel: +44 203-586-2225; email:
MNI London Bureau | +44 203-865-3812 |
MNI London Bureau | +44 203-865-3812 |
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