NAGOYA (REUTERS) - Bank of Japan governor Haruhiko Kuroda said on Monday (Nov 30) that the central bank will not hesitate to further ease monetary policy to achieve its two per cent inflation goal quickly, shrugging off calls to go slow in hitting the ambitious target.
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.
"What's most desirable is for exchange rates to move stably reflecting economic and financial fundamentals," Mr Kuroda told business leaders in the central Japanese city of Nagoya, home to auto giant Toyota Motor Corp, on Monday.
Japan relapsed into recession in the July-September period 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.
"We need to be mindful of risks, such as from emerging market developments," he said.
"The BOJ will respond without hesitation if it sees the need to do so to achieve its 2 per cent inflation target at the earliest date possible."
Mr Kuroda also shrugged off growing calls, even from BOJ board members, for the central bank to give itself more time to achieve its ambitious price target. Critics believe pushing up prices too quickly could hurt consumption.
"If the BOJ were to move slowly towards achieving the price target, wage adjustments would also be slow," he said.
"In order to overcome deflation - in other words, break the deadlock - somebody has to show an unwavering resolve and change the situation. When price developments are at stake, the BOJ must be the first to move."