June 16 (Reuters) - The Bank of Japan kept monetary policy steady on Thursday even as sluggish global growth and anaemic inflation put policymakers under pressure to do more to bolster the economy. The yen surged and Tokyo stocks fell.
Following are comments from BOJ Governor Haruhiko Kuroda at his post-meeting news conference:
JAPAN’S ECONOMIC OUTLOOK
“Domestic demand is expected to recover as a trend, while exports will likely gradually increase as emerging economies emerge from their slowdowns ... The underlying price trend is improving steadily so we’ll see inflation accelerate toward 2 percent. We expect Japan to achieve 2 percent inflation sometime during fiscal 2017.
PROSPECTS OF FURTHER EASING
“We will examine risks to the economy and prices, and won’t hesitate taking additional easing steps if needed to achieve our 2 percent inflation target.”
“The European Union, including Britain, has enjoyed the economic benefits of Britain joining the EU. Markets are being swayed ahead of the referendum. The BOJ is in close contact with the Bank of England and other overseas central banks. We will work closely with domestic and overseas authorities, while closely monitoring the outcome’s impact on the bond market and global financial markets including Japan’s.
“I won’t comment on (whether we could hold) an emergency policy-setting meeting” after the Brexit vote.
“I don’t think there is a high possibility that Japanese banks will face big problems in dollar procurement (if a Brexit impacts dollar funding). If events like a Brexit vote disrupt dollar procurement of Japanese or any other countries’ banks, we have ample tools available to deal with it.”
ON THE YEN’S RISE
“Yen rises and heightening volatility that do not reflect economic fundamentals are undesirable. We will closely watch markets including exchange-rate moves. Taking these points into account, we’re always ready to take additional easing steps without hesitation if needed to achieve 2 percent inflation.
On the yen’s surge to a 21-month high against the dollar after Thursday’s BOJ decision to stand pat:
“Excessive currency moves that do not fall in line with fundamentals are inappropriate. We are also aware that if yen rises are excessive, that could have quite a big impact on inflation ... But the effect of currency moves on prices don’t come immediately and tend to appear with some time lag ...
“The impact (of currency moves) on inflation could persist, so we’re closely watching market moves including currency rates. But the BOJ’s monetary policy doesn’t target exchange rates ... We don’t link our monetary policy directly to currency moves.
“I can’t comment on whether current yen rises deviate from fundamentals because we are not directly in charge of currency policy. But I will say that yen rises, as we’re seeing now, could have undesirable effects on Japan’s economy and future inflation.” (Reporting by Leika Kihara, Stanley White and Tetsushi Kajimoto; Compiled by Kim Coghill)
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