BoJ chief opens door to stimulus as oil prices drop

AFP, TOKYO: The head of the Bank of Japan said yesterday that he would consider pulling the trigger on more stimulus if weak oil prices keep holding back inflation. BoJ chief Haruhiko Kuroda said Japan’s economy was perking up, and the bank held off expanding its record 80 trillion yen ($640 billion) annual asset-buying scheme following a two-day meeting. But the country’s near-zero inflation rate is far below the BoJ’s 2 per cent target, a cornerstone of efforts to boost the world’s number three economy and conquer years of deflation.
“We would consider adjusting policy if oil rates affect price trends and impact on underlying price movements,” Kuroda told reporters. “But that is not the situation right now. We will continue to watch oil price trends and see how they influence underlying price movements.”
A glut of crude oil supply is seen as the main driver for a sharp decline in oil prices that has seen crude fall about 50 per cent from mid-2014 levels. Last month, Japan’s central bank cut its economic growth and inflation forecasts, fuelling speculation that it would soon expand its easing scheme, aimed at boosting prices and kickstarting growth. Economists widely expect the bank to act before year’s end to drag inflation higher.
After a brief recession last year, Japan posted stronger-than-expected growth in the first quarter as a pickup in capital spending drove the recovery.
The 1.0 per cent expansion in January-March—or 3.9 per cent on an annualised basis—was sharply up from an initial estimate of 0.6 per cent growth.
However, many economists expect second-quarter growth to be weaker, boosting the case for more BoJ policy action.
Earlier Friday, the bank kept its view that Japan’s economy was continuing to “recover moderately”.

 

BoJ chief opens door to stimulus as oil prices drop

AFP, TOKYO: The head of the Bank of Japan said yesterday that he would consider pulling the trigger on more stimulus if weak oil prices keep holding back inflation. BoJ chief Haruhiko Kuroda said Japans economy was perking up, and the bank held off expanding its record 80 trillion yen ($640 billion) annual asset-buying scheme following a two-day meeting. But the countrys near-zero inflation rate is far below the BoJs 2 per cent target, a cornerstone of efforts to boost the worlds number three economy and conquer years of deflation. We would consider adjusting policy if oil rates affect price trends and impact on underlying price movements, Kuroda told reporters. But that is not the situation right now. We will continue to watch oil price trends and see how they influence underlying price movements. A glut of crude oil supply is seen as the main driver for a sharp decline in oil prices that has seen crude fall about 50 per cent from mid-2014 levels. Last month, Japans central bank cut its economic growth and inflation forecasts, fuelling speculation that it would soon expand its easing scheme, aimed at boosting prices and kickstarting growth. Economists widely expect the bank to act before years end to drag inflation higher. After a brief recession last year, Japan posted stronger-than-expected growth in the first quarter as a pickup in capital spending drove the recovery. The 1.0 per cent expansion in January-Marchor 3.9 per cent on an annualised basiswas sharply up from an initial estimate of 0.6 per cent growth. However, many economists expect second-quarter growth to be weaker, boosting the case for more BoJ policy action. Earlier Friday, the bank kept its view that Japans economy was continuing to recover moderately.