Bank of Japan governor confident of US resolution

Bank of Japan (BoJ) governor Haruhiko Kuroda has said he does not expect the the US to default on its debt. Speaking on Thursday at the Council on Foreign Relations, the governor said "I don't expect US default." The US Congress has until 17 October to reach an agreement to raise the debt ceiling (although Boehner is expected to ask for a six week extension). Japan is the United States second largest creditor with China being the largest.

Zhu Guangyao, Chinese vice finance minister recently warned the US that the "clock is ticking" and failure to reach an agreement before 17 October would be a disaster for the world economy. He also said the two nations were inseparable due to the vast qauntities of US bonds held by the Chinaand that the he hopes United States fully understands the lessons of history," referring to the US debt downgrade by Standard & Poor's.

Speaking on domestic policy, Kuroda reiterated his position that the BOJ would do whatever was necessary to meet its two per cent inflation target.

At this stage the economy is on track, and I don't think I should say anything concrete about potential, possible measures.

So far the BoJ's stimulus plan appears to be achieving its objective of stoking higher inflation and increasing exports. The yen has fallen 12.5 per cent against the US dollar since the beginning of the year.