Kuroda upbeat on Japan's economic performance, assures BoJ will act if needed

Bank of Japan Governor Haruhiko Kuroda said that a weakening in the nation's currency did not pose a problem for the economy as long as the move was steady and reflected economic developments. Kuroda's comments were the latest sign of his tolerance for the recent weakening of the Japanese Yen; however, his reference to the necessity for stability was a nod to concerns among some companies that a further decline in the Yen would hurt them through higher import costs. Kuroda also added while the U.S. Federal Reserve is winding down its monthly asset purchases and U.S. interest rates will eventually increase, the BoJ remained committed to its aggressive easing to achieve 2.0% inflation target. Moreover, Kuroda assured businesses that the central bank will not hesitate to embark on fresh easing actions if needed to achieve its inflation target and get the economy out of years of deflation.

In an attempt to show that the Japanese economy is continuing to recover moderately, despite a sharp annualized 7.1% contraction in the three months through June, Kuroda referred to a different figure, pointing out that the economy expanded an annualized 1.0% in the first half of this year from the previous six months. Kuroda added the employment situation is expected to maintain its improving trend, exerting further upward pressure on wages.