BOJ’s Kuroda paints upbeat view on Japan Inc despite supply disruptions

FILE PHOTO: Bank of Japan Governor Haruhiko Kuroda speaks at a news conference in Tokyo

By Leika Kihara

TOKYO (Reuters) – Bank of Japan Governor Haruhiko Kuroda said on Wednesday robust profits will help companies ramp up capital expenditure despite hits to output from supply chain disruptions and factory shutdowns in Southeast Asia due to the COVID-19 pandemic.

“Japan’s economy will recover as the impact of COVID-19 wanes due to further progress in vaccinations,” Kuroda told an online seminar, adding that a “virtuous cycle” in the economy will intensify as consumption recovers in the wake of the global health emergency.

Kuroda said that while inflationary pressures have been weaker in Japan than in the United States and Europe, companies were not resorting to price cuts to lure demand as broadly as during Japan’s two-decade spell of deflation in the late 1990s.

Still, consumer inflation will be well below 2% in 2023, at around “1% or slightly more than 1%,” Kuroda said.

“We expect that inflation rate will steadily go up and eventually reach the 2% target, although not before 2023,” he said.

“If necessary, we will further relax our monetary policy” such as by cutting interest rates, he added.

(Reporting by Leika Kihara; Editing by Hugh Lawson)