Tuesday, June 6, 2023
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BOJ Kuroda denies near-term exit from easing

By Leika Kihara

TOKYO (Reuters) – Bank of Japan (BOJ) Governor Haruhiko Kuroda on Monday brushed off the possibility of a near-term exit from ultra-loose monetary policy, despite markets and policy The framers have expressed growing concern about what will happen after Kuroda’s term ends.

Investors continued to push up Japanese government bond (JGB) yields on expectations the Bank of Japan will be on the verge of a new governor when Haruhiko Kuroda’s second five-year term ends in April next year. Take office.

Japanese Prime Minister Fumio Kishida’s speech on Monday also reflected the focus on the post-Kuroda era. After the appointment of a new Bank of Japan governor, he will decide whether to revise Japan’s decade-long fight Deflation Blueprint. At a seminar, it was mentioned that the government may seek to change its joint statement with the Bank of Japan, which committed the central bank to achieve its 2% inflation target as soon as possible.

The BoJ surprised markets last week by widening its 225 quota band*) in a move aimed at mitigating long-term stimulus part cost.

Haruhiko Kuroda said on Monday that last week’s decision was aimed at boosting the effects of his ultra-loose policy, not the first step in withdrawing its massive stimulus package.

“This is definitely not an exit step. The BOJ will achieve its price target in a sustainable and stable manner by continuing monetary easing under yield curve control while wages rise,” Black Tian said in a speech to the Keidanren Federation, a business lobby group.

But Kuroda said wage growth is likely to pick up gradually due to a deepening labor shortage and structural changes in Japan’s job market, which would lead to higher wages for temporary workers and an increase in the number of permanent workers.

“Japan’s labor market conditions are expected to tighten further, and firms’ price and wage-setting behavior may also change,” Kuroda said.

“In this sense, Japan is approaching a critical moment for breaking a long period of low inflation and low growth,” he said. Curve Control (YCC) target, the short-term interest rate is set at -0.1%, t is set around 0% and his one-year bond yield.

BoJ’s relentless bond buying in defense of yield cap draws growing public criticism for distorting market pricing and resulting in an unpopular yen

Kishida’s government will consider next year revising the joint statement, which focuses on measures to combat deflation – a target that has become out of sync with a recent rise in inflation and prevents the BOJ from being more flexible, sources told Reuters. to adjust monetary policy.

Analysts say any such revision would increase the chances of the Bank of Japan adjusting its ultra-low interest rate.

Two-year Japanese government bond yields briefly rose to 0.225% on Monday, the highest since 2015, based on expectations of a near-term rate hike. The -year JGB yield also edged up to 0.225%, near the upper end of the new range of 0.5%.

Kishida offered no clues on his choice of next BOJ chief, saying only that the new appointee would be someone he “deems most suitable” at the time.



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