Bank of Japan Governor Haruhiko Kuroda said Thursday positive effects have started to spread through financial markets, the real economy and prices as a result of the central bank's monetary easing policy as it has begun to take hold.
In a speech in Tokyo, Kuroda said Japanese stock prices have been rising and the yen's appreciation has eased. Yet long-term interest rates, which are rising in many other developed countries, remain almost flat in Japan thanks to massive government bond purchases by the BOJ.
The BOJ chief also said employment and income conditions have improved, while corporate investment spending has started to pick up mainly in the nonmanufacturing sector.
On the outlook, Kuroda said the Japanese economy is expected to continue recovering moderately, adding, "The inflation rate is expected to rise gradually, accompanied by increases in corporate profits, employment and wages."
"The BOJ will continue quantitative and qualitative monetary easing as long as it is necessary" as it pursues its 2 percent inflation target, he said.
To beat deflation, Kuroda said the supply of "risk money" will be a major key. Japanese households' inclination to invest in safe assets "stands out" when compared to households in other countries due partly to Japan's prolonged economic stagnation and rooted sentiment of deflation.