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Kuroda Says BOJ Doesn't Rule Out Further Easing

2 Mar 2018 5:52 am
   By Megumi Fujikawa 

TOKYO--Bank of Japan Gov. Haruhiko Kuroda said Friday the bank didn't rule out the possibility of additional easing, if it is necessary to maintain price momentum, renewing his pledge to achieve 2% inflation during his second five-year term as BOJ chief.

"I'm not stubbornly saying that the bank won't change targets for short-term interest rates and the 10-year government bond yield. The bank could ease monetary conditions further if necessary," Mr. Kuroda told the lower house. The testimony was part of the reappointment process.

Asked if the BOJ will consider raising the rate targets if inflation reaches 1%, Mr. Kuroda said he's "cautious and negative" about such an option because premature rate increases could delay a recovery from a deflationary mindset that has gripped companies and consumers.

He added that it was not appropriate to discuss details of a potential exit at the moment as the central bank was still far from achieving its inflation goal, he added.

Mr. Kuroda, now 73, took the BOJ helm in March 2013 and launched a "bazooka" of monetary easing the following month, focusing on large purchases of government bonds and other unconventional steps such as stock fund buying.

In September 2016, the central bank made a policy overhaul and shifted its policy target to interest rates from the quantity of assets it buys. The bank currently guides the yield on 10-year Japanese government bonds around zero and short-term rates to minus 0.1%.

Prime Minister Shinzo Abe said earlier Friday that Japan is no longer in a deflationary situation thanks to Mr. Kuroda's easing program and praised him for doing so in a fairly short amount of time, given that the nation had struggled from deflation for nearly two decades.

Still, Mr. Kuroda has been grilled in parliament about failing to achieve the 2% inflation target, which Mr. Kuroda said in 2013 would be hit within two years. The BOJ has postponed the deadline for reaching the goal six times so far.

The bank currently forecasts inflation to reach 2% by March 2020.

On Monday, the lower house is scheduled to hear from two nominees for the bank's deputy governors--Masazumi Wakatabe, an economics professor at Waseda University known as an advocate of radical easing, and Masayoshi Amamiya, a career BOJ official who has helped Mr. Kuroda design key policies.

Write to Megumi Fujikawa at megumi.fujikawa@wsj.com

(END) Dow Jones Newswires

March 02, 2018 00:52 ET (05:52 GMT)

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