Kuroda defends BOJ’s extremely dovish stance in his last policy meeting

Outgoing central governor of Japan Haruhiko Kuroda defended the Bank of Japan’s extremely dovish monetary policy stance at his final policy meeting on Friday.

Bank of Japan left interest rates negative at -0.1%, in line with expectations – and reiterates central bank’s target of keeping 10-year Japanese Government Bond (JGB) yields around 0%.

The central bank has kept the base rate unchanged since 2016, when implementing the policy YCC (Yield Curve Control) Policyseeks to protect its target on the JGB by purchasing an unlimited amount of government bonds.

Kuroda was first appointed in March 2013. His current five-year term will end on April 8 and will be replaced by incoming BOJ head Kazuo Ueda. / want to mention high Ueda

Kuroda has led the central bank’s extremely dovish monetary policy over the past decade – even as global central banks in recent months have raised interest rates to curb inflation.

The BOJ shocks global markets in December when it extended its tolerance range to 50 basis points above and below its 0% target — up from 25 basis points previously.

On Friday, the 10-year Japanese government bond yield fell to 0.441%, below the upper ceiling of the central bank’s 50 basis point tolerance range above and below 0%. The Japanese yen weakened about 0.3% following the announcement and traded at 136.6 against the US dollar.

“The Japanese economy, although affected by factors such as high commodity prices, recovered as economic activity resumed,” the Bank of Japan said in its policy statement. . declare on Friday, concluding the two-day meeting.

“Financial conditions are generally favorable, although the financial position of companies remains weak in some segments,” the central bank said.

Japan’s Senate in parliament ratifies Ueda to become the next central bank governor, Kyodo reported. This sets the stage for the Japanese government to officially appoint Ueda after it is approved by the lower house on Thursday.

Congress also approved Shinichi Uchida and Ryozo Himino as the next deputy governors of the Bank of Japan, Kyodo said.

The central bank has delayed changes to its yield curve control policy and inflation target, saying it will aim to “achieve the 2% price stability target, for as long as necessary to maintain that goal steadily.”

The Bank of Japan “will continue to expand its monetary base until the observed annual rate of CPI increase (all items except fresh food) exceeds 2% and remains consistently above the target.” stable,” It says in a statement.

Japan’s consumer price index rose 4.2% in January – the highest CPI in 41 years. The next report will be published on February 24.

However, the central bank ended its statement with an upbeat note and said the national economy will continue to grow ahead.

“Japan’s economy is resilient, with the impact of COVID-19 and supply-side constraints easing though expected to come under downward pressure due to high commodity prices and a slowdown in the global economy.” foreign economy,” the central bank said.

“Japan’s economy is forecast to continue to grow at a rate above its potential growth rate,” it said.