TOKYO, Nov 29 (KUNA) -- Bank of Japan (BOJ) Policy Board member Sayuri Shirai on Thursday warned of downside risks to the outlook for the Japanese economy, highlighting uncertainty over economies overseas and adverse impact of the consumption tax hike.
"While both upside and downside risks exist, I personally assess the downside risks as greater," Shirai said in a speech to business leaders in the southern city of Kumamoto.
Shirai also said the main downside risks are possible downward adjustments related to overseas economies, such as Europe's sovereign debt crisis, slowing Chinese growth and the looming US fiscal cliff. In addition, she expressed concern over the impact of the planned sales tax hike in 2014, which could dampen consumer spending.
In August, parliament enacted government-proposed bills to double the sales tax rate to 10 percent in two stages by October 2015 to address the country's huge public debt.
As for the risks to price outlook, she said the risk balance is "titled to the downside," while the BOJ's projection could deviate either upward or downward.
Shirai also said the central bank will continue pursuing the powerful monetary easing, as the prospects for achieving the one-percent goal of annual consumer inflation in fiscal 2014 have not been insight.
At the end of a two-day policy meeting on November 19-20, the BOJ decided to keep the monetary policy unchanged by maintaining the size of its asset purchase program at the current JPY 91 trillion (USD 1.12 trillion).
The policy board also decided to leave the unsecured overnight lending rate unchanged at a range of zero percent to 0.1 percent. Japan's economy contracted in the July-September period at an annualized rate of 3.5 percent for first contraction in three quarters due to sluggish exports and external demands amid the global economic downturn. (end) mk.hb KUNA 291058 Nov 12NNNN