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Bank of Japan says economy in “moderate recovery”

Bank of Japan says economy in “moderate recovery”

The governor of the Bank of Japan (BoJ) has suggested Japan’s economy is on a “moderate recovery trend” which is set to continue.

In a statement to a parliamentary committee, Haruhiko Kuroda confirmed that the BoJ will continue with its programme of quantitative and qualitative monetary easing (QQE) with the aim to achieve a price stability target of 2 per cent “as long as it is necessary for maintaining that target in a stable manner”.

Mr Kuroda said the bank will examine “both upside and downside risks to economic activity and prices, and make adjustments as appropriate” as part of its monetary policy strategy.

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The governor pointed out that Japanese inflation is expected to remain subdued due to the impact of lower energy prices.

He said: “Based on the assumption that crude oil prices are expected to rise moderately from the recent levels, the year-on-year rate of increase in the CPI is likely to accelerate as the effects of the decline in crude oil prices dissipate, and reach around 2 per cent in or around fiscal 2015.

“It should be noted, however, that the timing of reaching 2 per cent could be somewhat sooner or later to some extent, depending on developments in crude oil prices.”

In the bank’s semi-annual report on currency and monetary control, Mr Kuroda suggested that employment and income had improved, with wage increases expected to be announced by firms this year at annual wage negotiations.

The BoJ launched QQE in April 2013 and took the decision to expand the programme in October last year.