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Bloomberg
There is “sufficient chance” the Bank of Japan will add to its unprecedented easing at next month’s policy meeting, central bank Governor Haruhiko Kuroda said in an interview published Saturday in the Sankei newspaper.
The BOJ won’t hesitate to act based on discussions on the results of a comprehensive review at its September 20-21 board meeting, Kuroda said in the interview. The bank will publish the results of the review, the first of its type since Kuroda became governor in March 2013, when it releases its policy statement at the meeting, he said.
Board members will discuss the economy and financial situation based on the comprehensive review, and if needed will take further easing steps without hesitation, Kuroda said in the interview. The governor regularly says the central bank won’t hesitate to add stimulus when needed, but he appears to be moving beyond his usual phrasing by saying there is “sufficient chance” of more easing.
“The market thinks the BOJ is running out of ways” to achieve its 2 percent inflation target in the fiscal year starting April, Ryutaro Kono, chief Japan economist at BNP Paribas SA in Tokyo, said by phone Saturday. “It’s important for the BOJ to dispel such concerns that it’s running out of ammunition.”
‘Technically’ Room
The policy review comes as prices continue to fall, moving away from the bank’s target. Interest from global investors is high as the BOJ is the biggest single holder of government bonds and also one of the biggest stockholders in Japan. Deputy Governor Kikuo Iwata said earlier this month that the central bank won’t taper its record easing program at the September meeting.
The BOJ isn’t short on policy suggestions. The International Monetary Fund is urging the country to resurrect the type of incomes policy once employed by former U.S. presidents Richard Nixon, Gerald Ford and Jimmy Carter. Japan’s main opposition Democratic Party has called for an end to negative rates, saying it damages financial markets functions.
Kuroda said in the Sankei interview that the chances are high that the BOJ will reach its inflation target in fiscal 2017, but uncertainties are rising due to the global economic situation. He said there is “technically” room for deeper negative rates while ruling out the use of so-called helicopter money.