Markets

Kuroda: Broad yen strength could affect inflation

Kuroda says BOJ won't hesitate to ease further

The next BOJ decision is April 28. Kuroda spoke with the WSJ today ( transcript ).

Highlights:

"In the last several weeks the yen appreciated not just against the dollar, but also against the euro, against many Asian currencies. And this kind of exchange-rate movement, as I said, could affect inflation dynamics. And so we, as I said, continue to carefully monitor and assess its impact on the inflation trend. As I said, we would not hesitate to further ease our monetary conditions."

He defended negative interest rates, saying they lowered long-term interest rates by around 20 basis points. He hinted the BOJ could cut further.

"If you look at European central banks, they have much lower or larger negative interest rates. ECB recently reduced its negative interest rate to -0.4 %. Our negative interest rate is only -0.1 %. So, technically, theoretically speaking, you know, there will be further room for reducing, enlarging negative interest rate. That is true. But, as I said, if necessary to achieve the 2 % inflation target at the earliest possible time, without hesitation we would adopt additional monetary easing by way of quantity, quality and interest rate individually or collectively."

He said the BOJ could technically go to -0.4% "But that does not mean that we will or we should."

How close is he to cutting further? He's careful not to hint but said they are making progress on inflation and that the output gap is close to zero by some measures.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Other Topics

ForEx