DAVOS (Switzerland) • Bank of Japan (BOJ) governor Haruhiko Kuroda said yesterday he would scrutinise 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," Mr Kuroda told reporters at the World Economic Forum in Davos, adding that he would carefully watch how global market turbulence affects Japan's economy and prices.

"We won't hesitate adjusting policy, including easing policy, if necessary to achieve our 2 per cent price target," he said. Mr Kuroda, however, did not say whether the BOJ would ease policy at this week's rate review.

In a panel session he attended before speaking to reporters, Mr 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 (programme) if necessary to achieve our 2 per cent target," he said.

Markets are simmering with speculation that 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 per cent, sources told Reuters.

REUTERS