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BOJ's Kuroda, upbeat on global outlook, says Japan recovery on track

Bank of Japan Governor Haruhiko Kuroda attends a news conference at the BOJ headquarters in Tokyo October 31, 2013. REUTERS/Yuya Shino
Bank of Japan Governor Haruhiko Kuroda attends a news conference at the BOJ headquarters in Tokyo October 31, 2013. REUTERS/Yuya Shino

By Leika Kihara and Stanley White

TOKYO (Reuters) - Bank of Japan Governor Haruhiko Kuroda said the U.S. and euro zone economies are gaining strength, seeking to dispel concerns among other policymakers that Japan's export engine and broader recovery were vulnerable to weakness overseas.

He was also optimistic about the prospects of the central bank meeting its inflation target, suggesting that any additional monetary stimulus would be some time away given the expected recovery in exports and firm household spending.

"The outlook is brightening somewhat due to a recovery in the United States and Europe. We have slightly upgraded our view of overseas economies," Kuroda told a news conference.

"We were worried about the U.S. fiscal standoff, but the impact has been very limited. We expect the U.S. economy to pick up pace as downside pressure from that fiscal situation eases."

His comments came after the BOJ, as widely expected, maintained the massive monetary stimulus put in place in April, under which it aims to achieve 2 percent inflation in roughly two years by doubling base money through asset purchases.

The central bank also retained its assessment the economy was recovering moderately.

OVERSEAS RISKS PERSIST

Japan's economy slowed in July-September as exports and household spending moderated, although analysts expect growth to accelerate in the current quarter as consumers try to beat a sales tax increase next April.

Soft exports have been a key concern for BOJ officials, who hope the global economy will pick up to make up for an expected downturn in household spending after the sales tax rise.

While a modest rebound in export volume in October may have tempered such concerns, pessimists in the BOJ's nine-member board had warned of sluggish growth in emerging Asia.

The BOJ's previous board meeting in October revealed the biggest rift since Kuroda launched his stimulus campaign in April, as three members dissented against the central bank's rosy outlook for achieving its price target.

Minutes of the BOJ's past meetings had also shown some board members voicing concern that disinflation may be spreading globally, including in the euro zone where inflation has fallen well below the European Central Bank's target.

Kuroda shrugged off weak euro-zone inflation as a significant risk, stressing that the ECB had already responded by cutting interest rates earlier this month.

"It's true prices in some countries, including Europe, are showing signs of disinflation. But this is why the ECB lowered interest rates," he said.

He also projected stable growth in China's economy, describing its domestic demand as "very strong," despite a survey released on Thursday showing Chinese factory activity grew at a milder pace in November.

Kuroda reiterated the BOJ's readiness to ease policy again if risks to the economy materialize, adding that the central bank still had policy measures available if needed.

But he stressed the economy was moving in line with the BOJ's projections for now, pointing out that private consumption remained strong despite a recent dip in household sentiment that may have been in anticipation of the tax hike.

(Additional reporting by Tetsushi Kajimoto; Editing by Richard Borsuk and John Mair)

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