Kuroda says economy still on track for 2% inflation, dismisses pessimism
TOKYO—Bank of Japan Gov. Haruhiko Kuroda brushed aside growing pessimism about the economy that has been fueled by a recent string of dismal data, saying Thursday that the central bank is still on track to achieve its 2% inflation target.
Providing his first take on the Japanese economy since data showed an annualized 6.8% contraction in the three months to June following an April increase in the sales tax, Mr. Kuroda highlighted his faith in the economy, even prodding Prime Minister Shinzo Abe to stick to a plan to raise the tax again next year.
“A positive growth mechanism is still working, both in the household and corporate sectors,” Mr. Kuroda said after the BOJ decided to keep its policy steady, as widely expected.
Asked about calls by some of Mr. Abe’s advisers to postpone the next tax increase, Mr. Kuroda said the risks of foregoing the move were much greater. The central bank and the government are equipped with tools to handle a potential growth slump, he said, but wouldn’t be able to easily deal with the “unpredictable consequences” of pushing back the tax plan.
Mr. Kuroda, formerly a top government currency official, also rejected the view that a further drop in the yen could hurt Japan’s economy rather than help it by pushing up the cost of imported goods for businesses as well as households.
