ALSO READBOJ to persist with monetary easing to boost inflation: Kuroda BOJ's Kuroda says limits to how deeply rates can go negative BOJ's Kuroda says sees no problem with policy divergence Kuroda says BOJ to keep easy policy, tread different path from Fed, ECB BOJ pushes back inflation target for sixth time, keeps policy steady
By John Revill
"Going forward, with the output gap improving steadily, firms' stance is likely to gradually shift towards raising wages and prices," Kuroda said in a lecture at the University of Zurich. "If further price rises come to be widespread, inflation expectations are likely to rise steadily."
"The Bank will continue to persist with powerful monetary easing to ensure that such positive developments are not cut short," he added.
"This powerful monetary easing ... has been producing remarkable effects," Kuroda said. "We judge that the economy is no longer in deflation, which is generally defined as a sustained decline in prices."
"As a result of 15 years of deflation, a deflationary mindset -- that is, the perception that prices will not increase easily -- has become deeply entrenched among firms and consumers, and there is still a long way to go before the price stability target of 2 percent is achieved."
The BoJ's expansive stance contrasts with the first stages of monetary tightening by the European Central Bank and the U.S. Federal Reserve, which are beginning to roll back the unconventional policies deployed after the global financial crisis.
"I think that the Bank's strong stance and persistent efforts towards achieving the price stability target of 2 percent are important," Kuroda said.
Although there remained issues to resolve to achieve the target of 2 percent inflation, he said the environment surrounding prices in Japan had improved steadily in the last five years.
"I am convinced that this shows that the Bank's efforts based on the economic theories underpinning (quantitative easing) have been going in the right direction," he said.
(Reporting by John Revill; Writing by Balazs Koranyi and John Revill; Editing by Kevin Liffey)
(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)