Bank of Japan (BoJ) Governor, Haruhiko Kuroda reaffirmed his position on Friday that Japan is successfully heading towards its target inflation rate of two per cent.
Kuroda told a press conference:
We expect Japan's consumer inflation to slightly exceed one per cent by year end.
There have been doubts as to whether the BoJ will be able to meet its target due to a rise in sales taxes next year. The BoJ maintained its current policy of monetary stimulus and said the economy was enjoying a modest recovery. However, the BoJ acknowledged the distionary effects of the frontloading and subsequent fall of domestic demand due to April's consumption tax increase.
Analysts at Daiwa Capital Markets Europe expect the BoJ to announce additional easing should the negative impact to demand from the sales tax rise become too obvious to ignore.
Kuroda added that the BoJ's policy was not aimed at devaluing the yen to assist exports.