Bank of Japan Gov. Masaaki Shirakawa on Thursday repeated his commitment to powerful monetary easing to help the country exit from persistent deflation, amid growing speculation the BOJ may take action at its next policy meeting later in the month.
“The bank recognizes that Japan’s economy faces the critical challenge of overcoming deflation and returning to a sustainable growth path with price stability,” Shirakawa said at the outset of a quarterly meeting of the BOJ’s regional managers.
He also said the economy has shown “some signs of picking up” such as an increase in reconstruction demand following last year’s huge earthquake, while noting the U.S. economy has improved moderately and the European economy has stopped deteriorating.
The gathering of the bank’s branch managers came after the BOJ decided to refrain from additional monetary easing at its two-day policy meeting ended Tuesday, leading market players to turn their attention to the next meeting, which scheduled for April 27.
With prospects unclear on how the BOJ will achieve its recently introduced 1 percent inflation goal, expectations are increasing that the bank may loosen its monetary policy through steps such as further expanding its asset purchase program.
Later Thursday, the BOJ will release its assessment of regional economies in the form of the Sakura Report, akin to the U.S. Federal Reserve’s Beige Book.
In the previous report in January, the BOJ downgraded its assessments for seven of the nine regional economies compared with three months earlier, in a sign that Japan’s economic recovery has paused amid slowing global growth and the yen’s persistent strength.