- Official familiar with the BOJ's thinking
It has been 13 months already since the time Kuroda launched his unprecedented stimulus programme. Growth has returned into the world's third largest economy, and the central bank has been very confident about the future prospects for now. Even the latest tax hike was not able to dampen Kuroda's optimism. There is no threat to the consumption from a recent tax increase, and the economy is on its way to beat deflation, but another problem to the rising optimism is lurking– sluggish exports. In case exports abroad continue to disappoint and will fall short of official projections, the recovery in Japan's economy could stall and the central bank will be forced to pull the trigger again in the coming months. Some analysts believe the Bank of Japan will expand its stimulus programme in July.
In a recent sign of weak exports growth was disappointing current account data. According to the Ministry of Finance, imports rocketed 23% from a year earlier in March, while exports climbed only 6.2%. Unless the economy re-thinks its energy plans, the costs of imports will continue rising, while exports are likely to be moderate. Kuroda has also named exports as a significant risk factor. However, preserving confidence in a sustained economic growth is vital for him. Voicing any doubts about key elements will hurt the overall confidence. For now, investors will focus on July's 10 monetary policy statement.
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