BOJ’s Kuroda Says Economic Recovery May Be Clear From Mid-2013
Bank of Japan Governor Haruhiko Kuroda said the central bank’s monetary easing in April was a necessary move to end more than a decade of deflation and the economy will probably start gaining momentum later this year.
“Japan’s economic recovery will probably become clear from around the middle of the year,” Kuroda said in Greater Noida, India, where he’s attending the Asian Development Bank’s annual meeting. “There have been good consumption data already, so I expect positive effects will be seen further in capital spending and other areas.”
Kuroda last month began a campaign to end falling prices by doubling monthly bond purchases in a bid to reach 2 percent inflation in two years. Optimism about Abenomics, the policy framework promoted by Prime Minister Shinzo Abe, has pushed up stocks and weakened the yen, helping improve consumer sentiment and boost exporters’ earnings.
Kuroda said today that he will monitor for “unexpected side-effects” of BOJ easing on emerging economies. He also said he doesn’t see an asset bubble forming in Asia because of capital inflows.
The BOJ maintained its plan to boost money supply at a policy meeting on April 26, and predicted inflation will almost match its target in two years even after a report highlighted deflation’s grip.
The yen has tumbled 17 percent against the dollar and the Nikkei 225 Stock Average has climbed more than 50 percent since mid-November when it became clear that Abe would win office in ensuing national elections. The yen touched 99.95 per dollar on April 11, the weakest in four years, and traded at 97.76 as of 7:24 p.m. in India.
The International Monetary Fund doubled Japan’s fiscal 2014 growth forecast to 1.4 percent from its January projection. IMF Chief Economist Olivier Blanchard said the Bank of Japan’s move was “appropriate” and its impact on the yen “a logical consequence.”
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