Bank of Japan Governor Haruhiko Kuroda on Monday reiterated his expectation to achieve the central bank’s ambitious 2.0 per cent inflation target.
The BoJ governor’s positive comments on inflation sent the yen to a four-month high versus the dollar.
Kuroda said that core consumer inflation was “moving around 1.0 per cent,” a slight change from three months ago when he said core consumer prices were around zero.
“The economy is expected to continue expanding moderately,” he added, reiterating his optimism on prospects for a sustained recovery, reports Reuters.
The comments sent the dollar falling as low as 110.63 yen JPY=, as some traders bought the yen on expectations the BOJ could dial back stimulus earlier than expected - a view that heightened after a slight cut in its debt purchases last week.
The BoJ also offered its most optimistic view on regional areas of Japan in nearly a decade in a quarterly report, underscoring its conviction a broadening recovery will help accelerate inflation to its target.
“Kuroda’s change in language merely reflects recent price gains, but people have become sensitive to even the subtlest difference since the BOJ cut bond purchases,” said Shuji Tonouchi, senior market economist at Mitsubishi UFJ Morgan Stanley Securities.
“Members of the government are also making more positive comments about escaping deflation. Policymakers are gradually changing their tone.”
Kuroda also said a moderate economic expansion now under way will help accelerate inflation toward the BOJ’s 2.0 per cent target, signalling its desire to maintain the status quo on monetary policy for the time being.
Japan’s economy grew an annualised 2.5 per cent in July-September to mark a seventh straight quarter of growth thanks to robust exports and capital expenditure.