NAGOYA (Japan) • Bank of Japan's governor has dismissed calls from critics to go slow on hitting the central bank's 2 per cent inflation target and stressed the need to take "whatever steps necessary" to achieve its ambitious consumer price goal.
Various policymakers in Japan, including BOJ board members, have recently warned that pushing up prices too quickly could hurt consumption and have called for the central to give itself more time to achieve its inflation target.
However, BOJ governor Haruhiko Kuroda yesterday reinforced the need to reinflate prices as a central bank priority.
"If the BOJ were to move slowly towards achieving the price target, wage adjustments would also be slow," Mr Kuroda told business leaders. "In order to overcome deflation - in other words, break the deadlock - somebody has to show an unwavering resolve and change the situation."
Japan relapsed into recession in July-September as slow wage growth and China's slowdown hurt consumption and exports.
Consumer prices have also kept sliding due largely to the effect of falling energy costs, keeping the BOJ under pressure to expand its massive stimulus programme to meet its pledge of accelerating inflation to 2 per cent by around early 2017.
Mr Kuroda said the recent weakness in exports and output was unlikely to hurt companies' investment appetite for now, as robust domestic demand has made the economy resilient to external shocks.
But he warned that the slowdown in emerging markets, if prolonged, could hurt business sentiment and discourage companies from boosting capital expenditure.
He also said that while monetary policy does not directly target currency rates, the BOJ will closely monitor yen moves because of their big impact on Japan's economy.