Even as it unveiled its 2% target last month, the central bank’s own forecasts showed consumer prices won’t rise that much in the coming two years.
Consumer prices excluding fresh food fell 0.2% in December. The price gauge hasn’t advanced 2% for any year since 1997, when a national sales tax was increased. In December 2002, Kuroda said, as vice finance minister, that the BOJ should aim to push up prices by 3% in three years. He said yesterday that 2% is an “appropriate” target.
“A clear inflation target is absolutely necessary, and a commitment by the Bank of Japan to eradicate deflation, 15 year-long deflation, through whatever measures available,” said Kuroda, who took the helm of the ADB in 2005.
Japan’s gross domestic product grew in the final three months of 2012 for the first time since March last year, according to the median estimate of 32 analysts surveyed by Bloomberg News. The GDP report is due on Feb. 14.
Kuroda also said that the yen’s depreciation doesn’t come too late to help his nation’s economy, which has seen manufacturers including Sharp Corp. and Sony Corp. hurt by a surging currency in recent years.
Toyota Motor Corp. has risen more than 50% in the past three months, with the automaker last week boosting its profit forecast for the year ending in March to a five-year high.
The jump in equities raises the risk of disappointment as Abe prepares to unveil his choice of central bank chief. The government should announce its nominations for the new BOJ leadership team by the end of February, the ruling Liberal Democratic Party said last month.
Kuroda is “the leading candidate” to head the central bank, Hiromichi Shirakawa, chief Japan economist at Credit Suisse Group AG in Tokyo and a former Bank of Japan official said this month, joining JPMorgan’s chief Japan economist Masaaki Kanno in the call.
Koichi Hamada, a retired Yale University economics professor who is advising Abe on monetary policy, said in December that Kuroda was a potential candidate, along with Kikuo Iwata, an economics professor at Gakushuin University, Kazumasa Iwata, president of the Japan Center for Economic Research and Heizo Takenaka, a former economic policy minister. Toshiro Muto, a former deputy BOJ governor, is also perceived in the running.
Abe’s nominee must be confirmed in Parliament. While the LDP has a majority in the lower house, it will need support from opposition lawmakers in the upper body.