- Haruhiko Kuroda, BoJ Governor
What if? Such a question arises too often when it comes to Japan. The world's third largest economy is supposed to reach the 2% inflation target next year, while exports should pick up on the back of weaker Yen. Analysts and some of the BoJ members, however, are constantly expressing their doubts about the current level of stimulus package, as latest data were not really convincing, while April's sales tax hike will become a massive drag on the economy.
Haruhiko Kuroda, however, is still confident about the strength of Japanese economy. This week he claimed that the Bank of Japan will not make huge bond purchases just to push the nation's government debt lower, after the economy reaches its goal of stable 2% inflation. A launch of the unprecedented stimulus programme in April 2013 has helped to suppress yields on the 10-year government bonds to its lowest level in the world even despite the fact inflation accelerated at the fastest pace since 2008. Both Kuroda and Abe now face a challenge to avoid any abrupt yield rises in case prices continue rising as planned.
Surprisingly, Kuroda claimed that the CPI has a potential to exceed the official target in the fiscal year ended in March. His Deputy, Hiroshi Nakaso also added to the optimism, stressing the economy will withstand the pain from the latest tax hike.
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