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Experts Say: 2017-04-21

Haruhiko Kuroda - Bank of Japan Governor

It’s premature to talk exit strategy

The Bank of Japan will continue with very accommodative monetary policy and maintain the current pace of asset purchases for some time, Governor Haruhiko Kuroda said in an interview.

While Japan's economy is doing better than thought a few months ago, the inflation rate is still quite sluggish, Kuroda said in New York on Thursday.

"I don't think our monetary policy is constrained by the fact that we have acquired 40 percent of JGBs already, or our balance sheet is about 80 percent of GDP, which is certainly large compared with other central banks,” Kuroda said.“We have acquired about 40 percent of JGBs outstanding. But that means that 60 percent is still in the market."

“It's premature to discuss in an exact way about exit strategy,” Kuroda claimed. While the Fed's strategy of keeping the balance sheet unchanged as it raises rates is one way to exit, "whether we would follow the Fed example or not depends on the situation when we decide exit strategy."

The BOJ is said to be considering a small reduction in its inflation forecast, people familiar with the BOJ's discussions said earlier this week. "The target is 2 percent - we're still around 0 percent. So it's a long way to go,” Kuroda added.

It should be noted that the topic of the sharp growth in the assets volume on the balance sheets of the central banks and their further actions has attracted increasing attention. Federal Reserve officials at one of the last meetings have already noted that the US regulator will begin to reduce its assets balance this year.

At the same time, some representatives of the Federal Reserve say that the Central Bank of developed countries will use large-scale money printing programs to buy up assets in the future.

This was previously announced by Eric Rosengren, the head of the Federal Reserve Bank of Boston, who payed attention to the huge amount of assets that central banks of developed countries have bought to counter the effects of the financial crisis.

Di Publish: 2017-04-21
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