By Leika Kihara
CHANTILLY, France (Reuters) - Bank of Japan Governor Haruhiko Kuroda said on Wednesday the central bank will debate monetary policy this month based on a view the economy is sustaining a moderate recovery, signaling that he saw no imminent need to ramp up stimulus.
But Kuroda reiterated the BOJ's readiness to top up monetary support if overseas risks, such as protectionist policies and geopolitical tensions, derail the path towards achieving the central bank's 2% inflation target.
"We're seeing some weakness in exports and output, but there's no change to the view Japan's economy is growing moderately," Kuroda told reporters as he arrived in the French town of Chantilly for a G7 finance leaders' meeting.
The global economy is sustaining moderate growth despite various risks, while capital expenditure in Japan remains "very firm", he said.
"The board will debate policy this month based on this view," Kuroda said. "Having said that, we will swiftly consider additional monetary easing steps if the economy loses momentum for hitting our inflation target."
Japan's economy expanded an annualized 2.1% in the first quarter but many analysts predict growth will slow in the coming months as the U.S.-China row hurts exports. October's scheduled sales tax hike may also curb consumption, they warn.
Annual core consumer inflation hit 0.8% in May, remaining distant from the BOJ's target despite years of heavy money printing that has pushed borrowing costs to or below zero.
Some analysts say the BOJ could ease as early as its July 29-30 rate review if global uncertainties trigger a yen spike big enough to derail Japan's export-reliant recovery.
But the BOJ is not likely to top up stimulus easily as years of aggressive easing have pushed borrowing costs to or below zero, straining commercial banks' margins and leaving the central bank with little ammunition to fight the next recession.
(Reporting by Leika Kihara; Editing by Catherine Evans)
