BoJ Governor Haruhiko Kuroda repeated his rhetorics that Japan is still long way from meeting the 2% inflation target. Therefore, it’s too early to talk about stimulus exit. But he assured the parliament that the central bank has the tools to smoothly exit from the ultra-loose monetary policy when needed. Kuroda added that “by combining various tools, it’s possible to shrink the BoJ’s balance sheet at an appropriate pace while keeping markets stable.” Meanwhile, he also hailed that while keeping long term yield low with the policy, BoJ also managed to maintain markets’ trust in JGBs. He noted “If market trust over Japan’s debt is eroded, it will be difficult for us to keep interest rates low with our yield curve control policy.”
Release earlier, minutes of BoJ January meeting showed that some board members were concerned with the impact of the loose monetary policy, especially on banks. The minutes showed “some members said it was important to continue to monitor and assess the positive impacts and side-effects of the current monetary easing policy, including its effects on Japan’s banking system.” Some member suggested to raised the yield target as economy improves. But another member (obviously Goushi Kataoka), called for ramping up the stimulus.
