* Miyao bullish on consumer-driven economy
* Miyao echoes Kuroda's confidence in outlook
* Some economists still worry about inflation target
By Stanley White
TOKYO, April 10 Bank of Japan board member Ryuzo
Miyao said on Thursday gains in consumer spending are being
driven by improving underlying demand which in turn should
increase upward pressure on prices.
"High stock prices are not the only reason that consumer
spending is recovering," Miyao said in the text of speech to
business leaders in Okayama, western Japan.
"A mechanism is in place that is stimulating underlying
demand. This is boosting corporate earnings and leading to
improvements in labour and wages."
Miyao said Japan's economy could continue to grow above its
potential rate after the temporary shock from a sales tax hike
on April 1, echoing equally bullish comments that BOJ Governor
Haruhiko Kuroda made earlier this week, which could cause some
economists to scale down their expectations that the central
bank will ease policy further.
The economy and consumer prices are moving broadly in line
with the BOJ's forecasts, Miyao said, which would support
Kuroda's argument that additional easing is not needed now.
Miyao expressed concerns about downside risks to the economy
last year, but in the speech on Thursday he said risks are
roughly balanced, suggesting he has turned more optimistic.
The BOJ voted unanimously on Tuesday to maintain its pledge
of increasing base money, its key policy gauge, at an annual
pace of 60 trillion to 70 trillion yen ($582-679 billion).
Speaking after the policy decision, Kuroda said there was no
need for additional stimulus to escape years of debilitating
deflation, which pushed the yen higher versus the dollar.
The BOJ has stood pat since launching an intense burst of
stimulus last April, when it pledged to accelerate inflation to
2 percent in roughly two years via aggressive asset purchases in
a country mired in deflation for 15 years.
The BOJ's 2 price target does have a two-year timeframe, but
the central bank has also committed to keep policy easy as long
as needed to reach the price target in a stable manner.
Miyao said that this makes the BOJ's monetary easing
open-ended and this can help keep inflation expectations on
A run of recent soft data, such as last week's "tankan"
survey that showed companies see a worse impact on consumers
from the April sales tax hike than from the previous increase in
1997, has cast doubt on how long Prime Minister Shinzo Abe's
reflationary policies can sustain the recovery.
That doubt has kept alive expectations the BOJ could act
again soon, with most analysts betting on further easing by
But Kuroda took a brighter view of the tankan, saying
companies see a steady rise in prices and their price
expectations were higher than many economists had forecast.
(Editing by Eric Meijer)