Osaka – Bank of Japan Gov. Haruhiko Kuroda vowed Monday the central bank will remain strongly committed to overcoming deflation, admitting that it will take more time for firms and households to adapt to inflationary changes.
It is “true that the pace of increase in fixed investments and wages is lackluster in the light of record profits,” Kuroda said in a speech in Osaka, explaining that protracted deflation is likely the cause for the slow improvement in the economy.
“With this in mind, the bank will continue to strongly commit itself to overcoming deflation and to achieving the price stability target of 2 percent,” he said.
On recent developments in prices, Kuroda said “the underlying trend in inflation has steadily improved,” given consumer prices, excluding for fresh food and energy, have increased for 23 consecutive months.
His remarks came after government data showed Friday that Japan’s consumer prices fell 0.1 percent in August from a year earlier, the first drop in more than two years, due mainly to falling energy prices.
With core consumer prices falling into negative territory for the first time since April 2013, the central bank is likely to face more pressure for further monetary easing in order to achieve its 2 percent inflation target, which is aimed at beating deflation.
The BOJ expects to achieve the goal around the April-September period of next year, but the timing “could be either earlier or later than the projection, depending on developments in crude oil prices,” Kuroda said.