TOKYO, Aug 8 (Reuters) - The Bank of Japan kept monetary policy steady on Friday and maintained its upbeat view of the economy, unfazed by a slew of weak data that heightened expectations of a deeper-than-expected contraction in the second quarter.
Following are quotes from BOJ Governor Haruhiko Kuroda at his post-meeting news conference:
“Exports and output have been weakening. But a positive economic cycle remains in place as job and income conditions steadily improve.”
“Exports have weakened, but are expected to increase moderately ahead against the backdrop of improvements in overseas economies.”
“Industrial output has been weak due to the effect of the sales tax hike and soft exports ... But corporate earnings and sentiment remain strong, and companies remain keen to boost investment. A positive cycle remains in place both for households and companies, so the economy is likely to continue improving moderately as a trend.”
“Japan’s economy is likely to continue recovering moderately with the effect (of the tax hike) seen gradually subsiding.”
“It’s true the effect of the tax hike is seen on consumption with the degree of impact varying from item to item. But taken together, the effect is gradually subsiding. As for the outlook, we need to scrutinise how a decline in real income will have on consumption. But we expect consumption to stay firm as job and income conditions steadily improve.”
“(Geopolitical risks) have been heightening somewhat ... We’d like to closely watch how those developments will affect markets and the world economy. But at this stage, they haven’t led us to alter our forecasts in a major way.”
”The BOJ’s top mandate is price stability, which is to achieve 2 percent consumer inflation at the earliest date possible and to maintain that level in a stable manner. If some factors arise that may have a severe impact on prices and threaten achievement of the price target, we of course won’t hesitate to adjust policy.
“Our mandate is price stability. That doesn’t mean, however, that we will look at CPI alone.”
“The output gap and inflation expectations have basically been moving as we expected, and will continue to do so. I don’t think stock price moves will have a major impact on inflation expectations.”
“I don’t think there is much chance Japan’s actual economic growth will fall below its potential, which is considered at 0.5 percent or somewhat lower than that. Of course, second-quarter GDP will contract in reaction to (the strength in) the first quarter. But as a trend, Japan’s economy is set to continue recovering.”
“A reversal of excessive yen rises has had a pretty big positive impact on Japan’s economy, such as a pick-up in corporate capital spending ... The Federal Reserve continues to taper its asset purchases, while the BOJ and the ECB continue to maintain ultra-loose policies. I don’t think there is any reason for the yen to rise.” (Reporting by Leika Kihara, Stanley White and Tetsushi Kajimoto; Editing by Chris Gallagher)