The Bank of Japan broadened
stimulus on Friday by doubling purchases of exchange-traded
funds (ETF), yielding to pressure from the federal government for
action, but disappointing financiers who had actually set their hearts on
more audacious procedures. Following are comments from BOJ Guv Haruhiko Kuroda at
his post-meeting news conference: JAPAN’S FINANCIAL HEALTH “Japan’s economy might see the speed of healing sluggish for a.
while due to some weak point in exports and output. But it is then.
expected to continue expanding above its prospective development rate.
and broaden moderately as a trend, with rising income driving.
spending amongst business and households.” NEGATIVE RATE OF INTEREST “Unfavorable interest rates are being accepted by markets and.
functioning appropriately. The effect of the rate cut (in January) is.
huge, and is already being felt in markets and the real.
economy. As seen in the experience in Europe, there is more room.
to cut rates deeper into unfavorable area.” BOJ FEDERAL GOVERNMENT BOND PURCHASES “The BOJ holds one-third of JGBs in the market but that.
ways we still have two-thirds left to purchase. I definitely do not.
believe we are reaching the limits of JGB purchasing.”.
” I do not believe we have actually reached the limitations both in regards to.
rate cuts and JGB buying.” EXTENSIVE POLICY REVIEW AT NEXT RATE CONFERENCE “We’ve chosen to conduct an extensive assessment of our.
policy with half a year having passed (given that the adoption of.
unfavorable interest rates). This is exactly what all the board members.
thought would be desirable … Whether that will affect financial.
policy choices will depend upon what the outcome of the.
assessment will be. The purpose of this assessment is to analyze.
exactly what’s essential to attain our 2 percent rate target. “We embraced QQE three years and three months earlier and.
expanded it in 2014 … However it’s true we have not had the ability to.
attain 2 percent inflation yet. We will obviously consider exactly what.
to do in regards to financial policy actions, based on the result of.
our comprehensive evaluation.”.
” The impact of our financial easing actions has been felt quite.
broadly on the economy, however not necessarily as much on prices.
That’s why we have to conduct this comprehensive evaluation. “Our extensive assessment will include scrutinising how.
the flattening of the yield curve affects financial.
organizations’ earnings.” “When we say the ‘drip-feed’ method of policy action is.
inappropriate, we’re speaking about the importance of taking.
essential and adequate steps at the time. It’s unwanted to.
hold back on taking essential, adequate actions and being forced.
into responding to degeneration (in the economy) later on.” Asked whether the BOJ was pre-announcing monetary relieving at.
its next conference by revealing its plan to perform a.
extensive evaluation: “We’re not announcing this based upon an.
assumption that we will do something on monetary policy. I am.
aware some central banks do pre-announce financial relieving. We.
do not do such a thing.”.
ASKED ABOUT PRESSURE FROM THE GOVERNMENT “I haven’t felt any pressure (from the federal government). However as.
composed in the BOJ law, monetary policy becomes part of broader.
financial policymaking … Just due to the fact that we rule out.
incrementalism, that doesn’t suggest we will release all our.
steps each time we alleviate. “At times we may utilize all three measurements of alleviating and.
other times we might not do so. Exactly what is essential is to take.
enough and needed actions at the time.” MONETISING GOVERNMENT DEBT “We have absolutely no strategy to monetise federal government debt.
We’re taking adequate and necessary steps exclusively for the.
function of achieving our price target.” HELICOPTER CASH “Advanced economies, consisting of Japan, do not perform.
financial and fiscal policies as a set. Such an idea, which.
includes direct financial obligation underwriting by central banks, is.
restricted by law. But when financial stimulus is expanded at a.
time the reserve bank is preserving ultra-loose financial policy.
to accomplish its price target, it enhances the boost to the.
economy.” “Such a policy mix … isn’t the reserve bank helping fund.
federal government spending. It’s different from helicopter money.”.
( Compiled by Leika Kihara and Kim Coghill).