Bank of Japan Gov. Haruhiko Kuroda played down the prospect of market turmoil causing Japanese companies to pare back capital spending and wage increases, and expressed confidence in the underlying pace of inflation less than a week before he decides on monetary policy.

"At this stage, we don't think the current market situation has been affecting corporate behavior unduly," Kuroda said in an interview in Davos, Switzerland, on Friday. "But, as I said, the market is the market, and markets could affect the real economy — so we carefully watch."

Kuroda, 71, was speaking ahead of one of the thorniest policy meetings since he took the helm of the BOJ almost three years ago. Waning inflation expectations, sliding oil prices and a reversal in the yen's declines have put pressure on the BOJ to expand an already-record stimulus program. Yet with concerns about China dominating the focus of financial markets, the danger is that further action by Japan may have limited impact.