TOKYO (Reuters) – The Bank of Japan is unlikely to raise interest rates for “quite some time” and recent steps to make policy more flexible is not preparation for policy normalization, governor Haruhiko Kuroda said in an interview published on Saturday.
The BOJ pledged in July to keep interest rates “extremely low” for an extended period adjusting policy to buy stocks and bonds more flexibly, including allowing the 10-year government bond yield to move in a slightly wider band around zero percent.
Economists polled by Reuters soon afterwards said this meant the central bank was laying the groundwork for an eventual exit from its massive stimulus but most said the move would not happen soon.
Kuroda told the Yomiuri Shimbun daily that any change in the BOJ’s interest rate policy remains distant.
“There is no thought about raising (rates) for quite some time,” he was quoted by the paper as saying, without giving further details.
Despite five years of massive asset buying and ultra-low rates under Kuroda, the BOJ remains far from achieving its 2 percent inflation target.
However, when asked if this target will be met during Kuroda’s term, which ends in 2023, he was quoted as saying “of course”.
Former BOJ board member Koji Ishida told Reuters in August that Japan’s healthy economic growth should allow the central bank to whittle down its massive stimulus program even before inflation hits 2 percent.
Another former board member said that the BOJ’s July decision to make its policy more flexible was more than just a tweak and that it could take further steps to normalize policy later this year.
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Source: Investing.com
