BOJ Optimistic About Japanese Recovery But Ready to Act if Sales Tax Backfires

The Bank of Japan said the world’s third-largest economy is recovering and signaled it would increase its huge stimulus only if a planned sales tax hike was to threaten its goal of lifting inflation to 2 percent in two years.

Governor Haruhiko Kuroda said on Thursday there was no need to ease policy further now after a slew of data saw the central bank declare the economy is recovering, its most upbeat view since March 2008, before the global financial crisis.

He called on the government to proceed with the two-stage doubling of the sales tax, saying it would not derail the economy and warning that there was little fiscal and monetary policy could do once trust in Japan’s finances was lost.

“It’s uncertain how government bond and stock prices would react if the sales tax hike were to be delayed,” Kuroda told a news conference after the BOJ’s policy meeting.

via Reuters

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