BOJ Kuroda: ‘Reversal rate’ helps understand appropriate yield curve

TOKYO (Reuters) – Bank of Japan Governor Haruhiko Kuroda said on Tuesday the idea of a “reversal rate,” or the level where interest rate cuts by a central bank could hurt the economy, helps the BOJ understand the appropriate shape of the yield curve.

“It’s a theory that helps us understand the appropriate shape of the yield curve,” Kuroda told parliament, though adding that he did not see any sign now that the BOJ’s ultra-loose policy was causing serious damage to Japan’s banking system.

Kuroda referred to an academic study on the reversal rate in a speech earlier this month, adding to recent growing signals from the BOJ that it could edge away from crisis-mode stimulus earlier than expected.

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