* Kuroda: main scenario doesn't require more easing
* Kuroda: ready to respond if downside risks increase
* BOJ chief stresses importance of sales tax hike
(Adds details, direct quote)
By Stanley White
TOKYO, Aug 21 Bank of Japan Governor Haruhiko
Kuroda said he won't hesitate to provide further monetary
stimulus if downside risks from a planned sales tax hike or
overseas economies increase, according to an interview in the
Mainichi newspaper on Wednesday.
Japan's economy isn't likely to slow if the government
proceeds with a plan to raise the sales tax, and the government
should take firm steps toward fiscal discipline, Kuroda was
quoted as saying.
However, when asked if additional easing was possible if the
sales tax hike caused a temporary contraction, Kuroda indicated
that the central bank has the capacity to ease policy to achieve
its price target.
"If things go according to our main scenario, additional
easing won't be necessary," Kuroda said, according to a
transcript of the interview.
"But you never know what is going to happen. You can't
determine how to respond in advance, but if something did happen
we wouldn't hesitate to respond."
Kuroda's remarks came amid signs the government is wavering
over whether to proceed with a planned two-stage hike in the
sales tax from next year, or opt for a more moderate rise to
ease the pain on an economy just emerging from stagnation.
Japan's economy expanded for three straight quarters in
April-June as Prime Minister Shinzo Abe's reflationary policies
brightened sentiment and bolstered personal consumption.
But growth slowed in the second quarter on an unexpected
fall in capital expenditure, casting doubt on whether the
economy can withstand the pain from the planned sales tax hike
The BOJ unleashed an intense burst of monetary stimulus in
April, pledging to nearly double the monetary base to 270
trillion yen ($2.8 trillion) by the end of 2014 via aggressive
bond purchases to end deflation and achieve its 2 percent
inflation target in two years.
The central bank has stood pat since then.
Improvements in personal consumption and investment show
that the BOJ's expanded quantitative easing is heading in the
right direction, Kuroda was quoted as saying.
The BOJ's purchases of government debt are also supporting
the economy as this is helping to keep interest rates low,
Kuroda said in the interview.
(Reporting by Stanley White; Editing by Paul Tait and Shri