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NEWSMAKER-BOJ chief Kuroda says no reason to withdraw monetary stimulus now
March 24, 2017 / 4:15 AM / 8 months ago

NEWSMAKER-BOJ chief Kuroda says no reason to withdraw monetary stimulus now

* BOJ kept policy unchanged this month

* BOJ Kuroda signals easy policy is here to stay

* Next meeting is April 26-27

* Exports boosting Japan economy but domestic demand weak (Adds details on policy)

By Leika Kihara and Stanley White

TOKYO, March 24 (Reuters) - Bank of Japan Governor Haruhiko Kuroda said on Friday there is “no reason” to withdraw the bank’s massive monetary stimulus now as inflation remains far from its 2 percent target.

Kuroda also dismissed financial market concerns that at some point in the future the BOJ will lose its ability to control long-term interest rates under its yield-curve-control framework.

“While some improvements have been observed in economic and price developments, there is still a long way to go to achieve our price target,” Kuroda said in a speech at a Reuters Newsmaker event.

Kuroda added that the BOJ won’t increase its bond yield target just because overseas long-term interest rates are rising, a scenario some traders believe is inevitable.

The BOJ maintained its short-term interest rate target of minus 0.1 and a pledge to guide the 10-year government bond yield at around zero percent after a policy meeting on March 16.

It also kept intact a loose pledge to maintain the pace of its annual increase in Japanese government bond (JGBs) holdings, which is 80 trillion yen ($718.78 billion).

Japan’s long-stagnant economy has shown signs of life in recent months, with exports and factory output benefiting from a recovery in global demand.

Core consumer prices rose for the first time in over a year in January and analysts expect them to continue to pick up slowly but steadily.

That has led to a dramatic shift in market expectations, with a majority of analysts polled by Reuters predicting the BOJ’s next move would be to start scaling back its ultra-easy policy, likely beginning by raising its bond yield target.

Japan’s domestic demand remains sluggish, however. Household spending fell 1.2 percent in January from a year earlier. ($1 = 111.3000 yen) (Reporting by Leika Kihara and Stanley White; Editing by Chris Gallagher and Kim Coghill)

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