Haruhiko Kuroda: BOJ pledges to maintain massive stimulus

BOJ pledges to maintain massive stimulus, according to the Bank of Japan Governor, Haruhiko Kuroda. He also sees the growth of the economy in Japan. What to expect from the BoJ rate review meeting?

21 October, AtoZForex Haruhiko Kuroda, the governor of the Bank of Japan (BoJ) has stated that the central bank might push back the timing for reaching its inflation target at its rate review this month.

Economy growth is expected

The reason for such measures is an underlying weakness in price growth levels in Japan. However, Mr. Kuroda did not provide any details in regards to the effect that the delay could put on the BoJ’s policy decision. Moreover, Mr. Kuroda has highlighted that the bank’s bond purchases rate might slow down in the future, in case 10-year bond yields drop far below its zero percent target.

Speaking in parliament today, Haruhiko Kuroda additionally stated he anticipates the economy growth in Japan to increase in the next fiscal year, as he sees the big prospects for the global growth. Furthermore, Mr. Kuroda stated that the weak trend in Japanese core consumer prices, which have marked the 6th consecutive month of annual drops this August, might trigger the cuts in BoJ’s inflation forecast at a rate review at the meeting of 31st October – 1st November.

Haruhiko Kuroda has added:

“There may be some modification to our forecast that inflation will hit our 2 percent target during fiscal 2017.”

BOJ pledges to maintain massive stimulus

Mr. Kuroda has also highlighted that the central bank had made a “very powerful” commitment by vowing to keep its massive stimulus program until the actual inflation levels will outperform its 2 percent target. He has stated:

“We will continue to implement an extremely accommodative, expansionary monetary policy not just to reach to 2 percent but to allow actual inflation go beyond 2 percent.”

Following on this, as BOJ pledges to maintain massive stimulus, the governor of BoJ has stated that cut would appear due to the weak oil prices in the market and the Yen’s recent gains that caused the import costs to drop.

Reportedly, the BoJ has been already forced few times to delay the timing for reaching its 2 percent inflation target, as the drops in oil prices combined with weak consumption dragged the prices down. In addition, under its new “yield curve control” rules, the BoJ’s key set of tools for monetary easing would be a deepening of the negative interest rates or lower its 10-year bond yield target.

Mr. Kuroda additionally mentioned that the BoJ might consider slowing down the rate of its bond purchasing program, as currently, Japan is spending 80 trillion yen ($769 billion) a year purchasing the bonds. This slowdown could help Japan to meet its new yield target .

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