"In my view, this second set of guidance warrants any necessary actions by the Bank beyond the two-year horizon, if it judges it necessary to do so in light of stably achieving 2 per cent"
-Sayuri Shirai, Bank of Japan board member
The world's third largest economy is on the track of sustain recovery, however it faces high risks from overseas economy, and structural reforms are vital to proceed with the revival. However, one of the Bank of Japan members backed central bank's forward guidance, saying it give the BoJ scope to take additional step if required to achieve its goal of 2% inflation and saying stimulus programme will not be ended until the target is reached.
Earlier this year Shirai expressed her concerns it would take considerable time to push inflation up to 2% in a country that has been mired in deflation over decades. In April Kuroda launched radical stimulus pledging to double the monetary base through aggressive bond purchases to meet its inflation target in about two years, and since then he has also reassured markets he is confident in reaching the threshold.
However, Japanese debt remains a serious concern. While the economy is growing, the debt is growing at the same time. The economy is showing signs of recovery; however, its ever-increasing debt mountain stands at more than twice the size of the economic output– the worst ratio among industrialized nations around the world.
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