Bank of Japan head Haruhiko Kuroda defended its decision to press ahead with the country’s ultra-loose monetary policy Friday, even as the US Federal Reserve and European Central Bank tighten their policies.
After a two-day meeting, the BoJ said it would retain its current framework, pointing to a disappointing lack of progress towards its longstanding 2.0 percent inflation target.
Speaking after the meeting, Kuroda said a persistent “deflation mind” was plaguing Japanese boardrooms and families, keeping the goal he had hoped to reach by 2015 a distant goal.
“I believe the momentum remains intact for us to achieve the two-percent price (inflation) target,” he said.
“I believe the current framework is sustainable,” he added of the bank’s decision to maintain its monetary easing measures.
Kuroda took the post in 2013 pledging that he would help put the economy on a sustainable growth path and eradicate Japan’s long-running problem of almost non-existent inflation.
After rounds of huge easing and stimulus programmes, he has had to delay the target date several times, with consumer prices rising only 0.7 percent in April, weaker than in past months.
The bank’s decision to keep its monetary policy in place and maintain its key policy rate around zero was widely expected.
But it sets it at odds with its US and European peers.
In the US, solid, ongoing economic growth has convinced the US Federal Reserve to gradually increase its policy rate.
And the European Central Bank is also making gradual steps toward normalising its easy monetary policy although it said its interest rates would stay at current record lows through at least the summer of 2019.
“In the United States, wages and prices are steadily rising. The FOMC’s (Federal Open Market Committee) decision to move toward normalisation… matches the reality of its economy and wages,” Kuroda said.
“Europe is progressing at a relatively slower pace,” and its normalisation efforts also being delayed accordingly, he said.
But Japan has been slow to see prices rise, as firms and consumers remain cautious on spending.
“A special factor affecting our country is that there remains ‘deflation mind’ in the corporate and household sectors after the 15-year period between 1998 through 2013 of deflation, low growth,” Kuroda said.
That cautious mindset has kept prices from rising, he warned,
“Deflation mind still remains. That’s a factor unseen in the US and Europe,” he said.

Tokyo stocks rose moderately on Friday, helped by Wall Street rallies and a cheaper yen against the dollar.
The benchmark Nikkei 225 index gained 0.50 percent or 113.14 points to close at 22,851.75, logging a weekly gain of 0.69 percent.
The broader Topix index was up 0.29 percent or 5.15 points at 1,789.04. It gained 0.43 percent over the week.
A record high for the US tech-rich Nasdaq index and a weak yen against the dollar supported Japanese shares, said Toshikazu Horiuchi, a broker at IwaiCosmo Securities.
The dollar fetched 110.89 yen in Asian afternoon trade, up from 110.58 yen in New York and 109.99 yen in Tokyo on Thursday.
“Investors are expected to try 23,000 in Nikkei next week, but concerns over the US-China trade dispute may weigh on the market,” Horiuchi told AFP.
On Wall Street, the Nasdaq surged to a fresh record Thursday, boosted by higher media shares, as traders shrugged off trade-war worries amid signs of accelerating US growth.
Meanwhile, the euro tumbled against the dollar after the ECB sketched out a longer-than-expected timeframe for hiking interest rates.
The ECB’s timeframe, included as part of its announcement that it would end stimulus bond-buying this year, stood out all the more a day after the US Federal Reserve accelerated its schedule for hiking interest rates.
Investors largely ignored the Bank of Japan’s widely expected decision to keep its ultra-loose monetary policy unchanged.
In Tokyo, SoftBank fell 0.19 percent to 8,324 yen after reports said it is mulling an investment of dozens of billions of dollars in a solar-power project in India.
Oriental Land rallied 2.48 percent to 11,960 yen after the Tokyo Disney Resort operator announced a plan to expand the park.
Sony was up 1.07 percent at 5,445 yen while Nintendo was up 1.69 percent at 37,760.
— AFP

Japan’s SoftBank is planning to invest between $60-100 billion in a solar power project in India, a Japanese report said Friday, as the firm looks to expand its interests into various sectors.
The report by public broadcaster NHK comes after SoftBank announced in March it would partner Saudi Arabia on a multi-billion dollar solar project that the company’s founder called the largest in the world.
NHK said the massive investment in India would be funded jointly by SoftBank and Saudi Arabia, which have already partnered to create the Vision Fund investment vehicle.
A spokesman for SoftBank declined to comment on the report.
NHK said the deal would likely be announced by SoftBank and the Indian government after details were finalised, without giving a timeline.
Under CEO Masayoshi Son, SoftBank, which started as a software firm, has increasingly been seen as an investment firm, ploughing funds into a broad range of companies and projects outside its core business. In recent years it has completed deals with the likes of French robotics firm Aldebaran and e-commerce Chinese giant Alibaba.
In March, Son said it would fund the “largest solar project ever”, in Saudi Arabia.
The project aims to generate 200 gigawatts of energy by 2030, with building beginning in 2018 and operations to start the following year.
The entire project is expected to cost $200 billion, with the first phase costing $5 billion.
SoftBank’s $100-billion Vision Fund, created in 2016 with money from Saudi and other investors, will contribute $1 billion to the first phase. — AFP

Euro selling extended into Asia on Friday after the European Central Bank said it would hold off hiking interest rates at least for another year, while equity traders were uneasy ahead of Donald Trump’s decision on whether to hit China with fresh tariffs.
The single currency was hammered on trading floors after the ECB’s announcement Thursday, which was accompanied by a cut in its eurozone growth outlook, citing rising protectionism and global trade fears.
Confirmation that it would end its crisis-era bond-buying stimulus provided little support as that had been widely expected.
The news came a day after the Federal Reserve said it would likely hike US rates twice more this year and four times in 2019, highlighting an increasing divergence between the two.
The euro dived to $1.1580, from above $1.1800 earlier Thursday. And in early Asian trade the unit sank even further towards 10-month lows.
“The signals from the (Fed) and ECB couldn’t be more different,” said Stephen Innes, head of Asia-Pacific trading at OANDA. “The Fed, barring any unexpected financial market calamity, is primed to raise interest rate every quarter while the ECB will continue to sit on their hands well into 2019.
“These opposing views should see interest rates diverging more between the two most powerful central banks in the US’s favour which should continue to lend support to the dollar. And should keep the Euro circling the drain well into the summer.”
EU agrees tariffs
The news sent European stocks soaring as a cheaper euro boosts the bloc’s exporters. But while the Nasdaq hit another record on Wall Street, US stocks were choppy as fears grow that Trump will on Friday announce tariffs on billions of dollars worth of Chinese imports.
Those worries filtered through to Asia, where markets fluctuated. Tokyo ended the morning 0.4 percent higher and Sydney added more than one percent.
Hong Kong gained 0.1 percent and Wellington edged up but Shanghai lost 0.3 percent, Seoul dropped 0.5 percent and Taipei was also lower.
Trump is due to make a decision Friday, with many expecting him to push through the measures, with China threatening to retaliate in kind — stoking fears of a trade war.
Tai Hui, JP Morgan Asset Management chief market strategist for Asia-Pacific, said that while a thumbs-up from Trump would not be a surprise, there were concerns that talks between the two sides have seen little progress.
He added that another worry Trump’s threatened sanctions on Canada and the European Union.
The EU on Thursday approved a raft of tariffs targeting US goods.
Shane Oliver, head of investment strategy at AMP Capital Investors in Sydney, warned: “Implementation of the tariffs, when it occurs, could take us closer to a trade war.”
The International Monetary Fund said the White House’s import duties could harm the world economic recovery by “catalysing a cycle of retaliatory responses” and interrupting global supply chains.
Key figures around 0230 GMT
Tokyo – Nikkei 225: UP 0.4 percent at 22,827.77 (break)
Hong Kong – Hang Seng: UP 0.1 percent at 30,459.56
Shanghai – Composite: DOWN 0.3 percent at 3,036.04
Euro/dollar: DOWN at $1.1564 from $1.1580 at 2100 GMT
Pound/dollar: DOWN at $1.3250 from $1.3270
Dollar/yen: DOWN at 110.50 yen from 110.64 yen
Oil – West Texas Intermediate: UP six cents at $66.95 per barrel
Oil – Brent Crude: DOWN five cents at $75.89 per barrel
New York – Dow Jones: DOWN 0.1 percent at 25,175.31 (close)
London – FTSE 100: UP 0.8 percent at 7,765.79 (close)
— AFP

President Donald Trump on Friday was due to unveil a final list of Chinese imports that would face punishing tariffs but it remained uncertain whether he would hold fire as part of a negotiating strategy.
Imposing the tariffs would escalate the trade confrontation with Beijing, and potentially set off a round of tit-for-tat retaliation, which economists warn would damage the global economy.
The deadline to release the list comes as Washington faces a dizzying array of parallel diplomatic horse trading, as Trump is increasingly dependent on Beijing to help advance efforts at North Korean denuclearization, while also using aggressive trade tactics on all major US economic partners.
The president’s trade team, including senior officials from the Commerce and Treasury departments, were due to gather Thursday at the White House to finalize the list of Chinese goods on the hit list.
A report in the Wall Street Journal quoting sources close to the matter said Thursday evening the list had been approved and would affect about $50 billion worth of goods, the same figure that was first announced in March.
Chinese Foreign Minister Wang Yi urged Washington to avoid a “lose-lose approach” on trade.
Trump has frequently reversed course, threatening and then backing away, or vice versa, but he has appeared determined to take a hard line with Beijing.
“What we’re seeing here is a bargaining process in which the Trump team has found that by continuing to put pressure on China, the offers have become better and better,” said Dennis Wilder, head of a Georgetown University program on US-China relations.
“My guess is that the Trump administration will announce but not implement. They want to give the Chinese a little more time,” the former senior CIA official for East-Asia told AFP.
The confrontation with China began when Trump announced in March 25 percent tariffs on about $50 billion in Chinese goods to punish the country against the theft and forced transfer of American technologies and know-how.
China immediately threatened to retaliate on $50 billion in US goods, so Trump upped the ante, vowing to hit another $100 billion of goods.
A preliminary list of about 1,300 Chinese export goods was released in April by US Trade Representative Robert Lighthizer, with about 70 percent of the goods coming from categories covering nuclear reactors, electrical machinery and optical equipment.
A mystified Beijing
However, the list was due to be trimmed after a public comment period to reduce the negative impact on US companies and consumers, so the final total is not confirmed. CNBC reported Thursday Trump officials planned to winnow that list to between 800 and 900 goods.
It was also unclear when the tariffs would take effect. The White House said last month the final list would be unveiled on June 15, with the duties to be imposed “shortly thereafter.”
Trade talks with Beijing have been subject to repeated about-faces and turmoil among US officials, which analysts say has left Chinese officials unsure of Trump’s goals or which of the several senior emissaries from Trump’s Cabinet actually has the power to seal a deal.
“I think the Chinese have been mystified by what the administration wants,” said Nicholas Lardy, an expert on the Chinese economy at the Peterson Institute for International Economics.
Trump has moved to save the Chinese telecommunications giant ZTE from US sanctions imposed in April that brought it the verge of collapse, sparking outrage from congressional Republicans, and last month the White House effectively declared a truce in the trade hostilities with China before deciding weeks later to press ahead with tariffs.
Analysts say the tens of billions of dollars in tariffs that Washington is preparing to levy on China amount to a pittance when compared to the size of the world’s two largest economies — limiting their power to bend Beijing to Trump’s will.
But others worry about the sign it sends, and the potential to damage the world economy.
Trump faces competing objectives in pursuing a North Korean deal while seeking comprehensive economic concessions from China, which might loosen economic pressure on Pyongyang if Washington presses too far.
“We’re asking them to completely change who they are and we’re shaking this little stick in front of them,” said Derek Scissors, an expert on the Chinese economy at the American Enterprise Institute.
“I’m a China-basher on trade,” he told AFP, but added: “I don’t see why we’re imposing $50 billion worth of tariffs on China. It’s not going to do any good.”
— Douglas Gillison, AFP