By Leika Kihara
TOKYO (Reuters) -Bank of Japan Governor Haruhiko Kuroda on Thursday stressed the bank's readiness to maintain massive stimulus, as the fallout from the pandemic weighs on consumption and keeps inflation distant from its 2% target.
Kuroda said the world's third-largest economy is expected to show clearer signs of recovery as robust corporate profits and capital expenditure offset some of the weakness in consumption.
But he warned the outlook for consumption, which holds the key to a sustained economic recovery, was highly uncertain and dependent on developments regarding the pandemic.
"Consumption is expected to pick up if further progress in vaccinations allow society to curb infections, while resuming economic activity," Kuroda said in a speech delivered to an online annual meeting of Japan's securities industry.
"But the timing and pace of recovery in consumption remains highly uncertain and could change depending on how the pandemic unfolds."
Kuroda maintained his optimism on exports and output, saying they continue to rise despite the impact of supply constraints.
With service-sector firms still facing funding strains, the BOJ will focus on cushioning the blow from the pandemic mainly through loan programmes put in place last year, Kuroda said.
"We will scrutinise the impact of the pandemic on the economy and take additional easing steps without hesitation if needed," he said.
Robust exports driven by solid global demand have helped offset weak consumption and pull Japan's economy out from the severe slump last year caused by the pandemic.
But chip shortages and supply disruptions caused by Asian factory shutdowns have hit production of Japanese manufacturers, threatening to derail the country's fragile recovery.