15 Jul 2014
BoJ's Kurdoa: Sales tax hike effect seen subsiding
FXStreet (Łódź) - Following Bank of Japan's decision to keep monetary policy on hold in July, governor Haruhiko Kuroda said that Japan's economy continued exceeding its potential growth rate and that the effect from the sales tax hike was seen subsiding.
"The downturn in spending after the sales tax hike is roughly within expectations ... Domestic demand, including capital expenditure, remains firm as a trend. A virtuous cycle in economic activity clearly remains in place," the governor assured.
Kuroda also predicted that inflation would reach the 2% goal around the middle of the forecast period between fiscal year 2014-2016, moving largely in line with April forecasts and not expected to drop below 1% again.
QQE, which was having the intended effect, wouldn't be withdrawn until the 2% inflation target was reached, Kuroda stressed, adding that other adjustments would be made if needed. If the Fed steadily headed towards increasing rates and the BoJ kept QQE in place, the yen shouldn't rise against the dollar, he said.
"The downturn in spending after the sales tax hike is roughly within expectations ... Domestic demand, including capital expenditure, remains firm as a trend. A virtuous cycle in economic activity clearly remains in place," the governor assured.
Kuroda also predicted that inflation would reach the 2% goal around the middle of the forecast period between fiscal year 2014-2016, moving largely in line with April forecasts and not expected to drop below 1% again.
QQE, which was having the intended effect, wouldn't be withdrawn until the 2% inflation target was reached, Kuroda stressed, adding that other adjustments would be made if needed. If the Fed steadily headed towards increasing rates and the BoJ kept QQE in place, the yen shouldn't rise against the dollar, he said.