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BOJ to persist with monetary easing to boost inflation - Kuroda

Reuters  |  ZURICH 

By John Revill

ZURICH (Reuters) - The of will continue to persist with "powerful monetary easing" to nurture positive developments, Governor Haruhiko said in Zurich on Monday.

"Going forward, with the output gap improving steadily, firms' stance is likely to gradually shift towards raising wages and prices," said in a lecture at the University of Zurich. "If further price rises come to be widespread, expectations are likely to rise steadily."

"The will continue to persist with powerful monetary easing to ensure that such positive developments are not cut short," he added.

launched a massive asset buying programme in 2013 to revive with the aim of reaching the of Japan's 2 percent target, but remains around 0.5 percent.

"This powerful monetary easing ... has been producing remarkable effects," said. "We judge that the economy is no longer in deflation, which is generally defined as a sustained decline in prices."

But while CPI was in the range of 0.5 to 1 percent, remained cautious, saying the deflationary mindset remained entrenched in

"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."

He said it remained important for the of not to ease up on its efforts to stimulate

Under a framework adopted last year, the now guides short-term interest rates at minus 0.1 percent, and the 10-year government bond yield around zero percent.

The BoJ's expansive stance contrasts with the first stages of monetary tightening by the European Central 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," said.

Although there remained issues to resolve to achieve the target of 2 percent inflation, he said the environment surrounding prices in 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.)

First Published: Mon, November 13 2017. 23:59 IST
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