Bank of Japan says easing policy is paying off

22/05/2014 07:33 AST

TOKYO -- Bank of Japan Gov. Haruhiko Kuroda said Wednesday that Japan's unprecedented monetary easing policy has been "having the desired effect" and expressed confidence that the bank will meet its inflation target.

Speaking at a news conference following the bank's policy board meeting, Kuroda said it would be "most preferable" if the bank's goal of raising inflation to 2% within two years could be achieved together with increased employment and wages.

BOJ watchers quickly noted that, for the first time, wording included in previous post-meeting statements was absent this time around. The prior documents had stated that the bank sees its monetary policy as something that will "lead Japan's economy to overcome the deflation that has lasted for nearly 15 years."

The change even fueled suspicions that the BOJ may be declaring an end to deflation. But Kuroda was quick to deflect such assumptions.

"We had in mind that a year has passed since the introduction of easing," he said. "It's absolutely not the case that we changed the substance of it."

A declaration from the bank that Japan has rid itself of deflation would likely prompt market participants to further lower their hopes for additional easing measures, which have strengthened stock prices and softened the yen. Kuroda was likely trying to quell such speculation with his response.

With stabilizing prices an imperative mission for the BOJ, Kuroda reiterated his position that the bank "will continue the current easing until its target is achieved."

"It would be desirable for (the economy) to grow in a well-balanced manner under a virtuous cycle of production, income and spending," he said.

Asian Nikkei