TOKYO Aug 8 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
Following are quotes from BOJ Governor Haruhiko Kuroda at
his post-meeting news conference:
EXPORTS, INDUSTRIAL PRODUCTION
"Exports and output have been weakening. But a positive
economic cycle remains in place as job and income conditions
"Exports have weakened, but are expected to increase
moderately ahead against the backdrop of improvements in
"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."
TAX HIKE IMPACT
"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
"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
"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)