Bank of Japan chief Haruhiko Kuroda said Thursday that Japan's economy has not fully beaten deflation, pledging to Prime Minister Shinzo Abe that the central bank will maintain its ultraeasy monetary policy until it achieves its 2 percent inflation goal.
"I told the prime minister that Japan's economy is on a steady path toward attaining the 2 percent price stability target," while explaining economic conditions at home and abroad, Kuroda told reporters after meeting with Abe.
Kuroda said Japan "is not completely out of deflation," adding, "We will continue with quantitative and qualitative easing until we achieve 2 percent inflation and can stabilize it."
His remarks came after the government dropped the word "deflation" in its monthly economic report Tuesday for the first time in more than four years, with consumer prices rising recently.
As Abe has also stopped short of formally announcing the end of deflation, the premier and Kuroda apparently confirmed their cooperation to shore up the economy amid lingering concern that the planned 3-percentage-point sales tax hike to 8 percent next April may weigh on consumer spending and in turn the broader economy.
"I will explain economic conditions on a regular basis" to Abe, Kuroda said.
Japan's consumer prices rose by 0.9 percent in October from a year earlier, the fastest growth in five years, on the back of an increase in energy prices and other items, the Ministry of Internal Affairs and Communications said late last month.
The government and the BOJ expect the country's consumer price index to gain 1.2 percent and 1.3 percent, respectively, in fiscal 2014 through March 2015, excluding the effects of the scheduled tax hike.