Tokyo: The Bank of Japan will do whatever it can to beat the plague of deflation, governor Haruhiko Kuroda said on Wednesday, adding "half-baked" measures would only worsen the problem.
Just days after he took the markets by surprise with a massive enlargement of the Bank`s already-hefty stimulus programme, Kuroda said the path forwards was clear.
"In order to completely overcome the chronic disease of deflation, medicine should be taken until the end," he told private- and public-sector officials in Tokyo.
"A half-baked medical treatment will only worsen the symptoms," he said.
Japan`s economy, now the world`s third largest, has suffered through more than a decade of deflation, a debilitating phenomenon that encourages consumers to put off purchases in the knowledge that things will be cheaper in the future.
That hurts producers, who cut back on wages or employment, further dampening demand in a self-reinforcing circle.
Kuroda`s comments come after the central bank said Friday it would widen its asset-buying plan by as much as 20 trillion yen ($182 billion) to an eye-popping 80 trillion yen annually.
The announcement sent the yen into freefall and lit a fire under stock prices.
The central bank chief has repeatedly said the programme -- dubbed quantitative and qualitative easing -- is aimed at influencing people`s behaviour by generating expectations that prices will rise in the future.
"Conversion of the deflationary mindset has been steadily progressing under the (policy). Such progress should not be stopped now," Kuroda said Wednesday.
"A transition from a bad and shrinking equilibrium to a good and expanding equilibrium brings significant changes to Japan`s economic and social systems," he said, repeating now is a "critical moment" to achieve sustainable growth.
"The Bank will do whatever it can to achieve the price stability target at the earliest possible time," he said.
Kuroda has been bullish in his ambition to achieve two percent inflation in about two years from 2013.
However, he failed to carry his full board with him last week, with only five of the nine members of the committee backing the expansion.
Critics charge that monetary policy alone cannot overturn years of somnolence in Japan`s once hard-charging economy.
They insist that structural changes, including a relaxation of rigid labour laws, are necessary, and say Japan`s government must step up to the plate.
