LIMA (Reuters) - Bank of Japan Governor Haruhiko Kuroda on Friday blamed slumping oil costs for keeping inflation low in many advanced nations, stressing that he saw no immediate need for countries to deploy additional fiscal and monetary steps to stimulate growth.
But he said central banks of advanced economies, including the BOJ, must maintain their ultra-easy policies and stand ready to act with inflation well below their targets.
“Many advanced nations have a price target of 2 percent and it’s true actual inflation is below that level. But most of this is due to declines in oil and commodity prices,” Kuroda said.
“I don’t think there’s a need to rush into (action) at this point,” he said at a news conference after the International Monetary Fund’s annual meetings.
Kuroda was optimistic on emerging markets, saying that while some nations were suffering from capital outflows, many have sufficient buffers to weather the market turmoil compared with what Asia went through during its financial crisis in the late 1990s.
Finance Minister Taro Aso echoed the optimism, telling the news conference that the risk to the global economy from China’s slowdown was not big enough for global policymakers to consider a coordinated response.
“If you ask whether China wanted such action, the answer would be no,” Aso said.
But he said policymakers must enhance communication with market participants as China’s stock market rout in August has sharply dampened investors’ risk appetite.
The IMF warned on Friday that risks to the global economy have heightened as emerging markets in particular suffer from low growth and falling revenues from commodity exports.
The global slowdown has weighed on Japan’s economy, which shrank in the April-June period and may have contracted again in July-September on weak exports to emerging markets.
Japan’s consumer inflation slid in the year to August on oil price declines and soft household spending, keeping the BOJ under pressure to expand an already massive stimulus program to accelerate inflation toward its 2 percent target.
Reporting by Leika Kihara; Editing by Chizu Nomiyama and Leslie Adler