Kuroda Suggests Price Growth Won't Accelerate

        By Takashi Nakamichi and Tatsuo Ito
        TOKYO--Bank of Japan Gov. Haruhiko Kuroda said Friday that the pace of growth in the nation's prices may not start to pick up again until early summer, striking a cautious tone as falling global oil costs threaten to push the rate of inflation further down in Japan and elsewhere.
        "Considering the recent drop in crude oil prices, it may be difficult for growth in the rate of inflation to accelerate in the first half of next year," Mr. Kuroda said at a news conference following a two-day policy meeting, where the central bank kept its policy on hold.
        But Mr. Kuroda stopped short of suggesting the BOJ was considering additional easing measures. He stuck to his bullish observations of inflation expectations, and reaffirmed his faith in the central bank's main projection that the inflation rate will likely reach the BOJ's target of 2% "in, or around," the year through March 2016.
        "The conversion of the deflationary mindset of the Japanese people is making steady progress," thanks to the BOJ's move in late October to ramp up its monetary stimulus measures, Mr. Kuroda said. Various surveys suggest that Japanese households and corporate managers continue to expect that prices will rise more over the coming years, he said.
        Mr. Kuroda rejected criticism that it doesn't make sense for the BOJ not to act this time because oil prices are much lower than in October, when the central bank eased policy referring to cheaper petroleum and its potential impact on Japanese price views.
        "I believe that inflation expectations, from a broad perspective, have been maintained at elevated levels because of the effects" of the October action, he said. "We need to compare what has happened with what could have happened if we hadn't expanded our quantitative and qualitative easing program at that time."
        Mr. Kuroda also said that while a further decline in oil prices will likely undercut Japan's inflation rate over the short-term, "from a slightly long-term perspective, a fall in crude prices will work to push prices higher" by stimulating economic growth.
        Write to Takashi Nakamichi at takashi.nakamichi@wsj.com and Tatsuo Ito at tatsuo.ito@wsj.com
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        (END) Dow Jones Newswires

        December 19, 2014 03:40 ET (08:40 GMT)

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