TOKYO, July 20 Europe's sovereign debt crisis
poses risks to Japan's economy because it could lead to a
further appreciation of the yen as investors seek relatively
safe assets, Bank of Japan Governor Masaaki Shirakawa said on
Europe's debt crisis could also weigh on Japan's exports,
lead companies to delay capital spending and destabilise the
financial system, Shirakawa said in parliament.
It is possible for Japan's consumer prices to rise by 1
percent not long after the fiscal year starting in April 2014 as
the output gap gradually narrows, Shirakawa told the upper house
special committee on tax and welfare reform.
The BOJ set the 1 percent inflation target and eased policy
in February, and followed up with additional stimulus in April,
to show its determination to hit that goal and overcome the
deflation that has stifled the economy for much of the past two
At its latest policy meeting, the central bank held off on
further policy easing last Thursday despite slowing global
growth that has driven other major central banks into expanding
stimulus, convinced that robust domestic demand will keep
Japan's economic recovery on track.
The central bank forecast that the consumer price index,
excluding fresh food, will rise 0.7 percent in the fiscal year
from April 2013.