BOJ’s Kuroda Says There Is No Limit to Monetary Easing ahead of Bank’s Comprehensive Review
Bank of Japan (BOJ) Governor Haruhiko Kuroda disagrees that there are “limits” to monetary easing, setting the stage for officials’ comprehensive assessment of the economy later this month.
“It is often argued that there is a “limit” to monetary easing, but I do not share such a view. Needless to say, there is a limit in the sense that there are things that “cannot be done legally” or “should not be done,” such as directly underwriting government bonds and monetizing fiscal deficits. As I said earlier, however, even within the current framework, there is ample room for further monetary easing in either of three dimensions — quantity, quality, and the interest rate — and other new ideas should not be off the table,” Kuroda said Monday in a speech at the Kisaragi-kai Meeting in Tokyo.
Kuroda set the stage for what is expected to be a pivotal central bank board meeting on September 20-21. According to a recent Economic Calendar report, the Japanese central bank is divided on the size and scope of its future stimulus program, with some members favouring a refinement of the existing strategy and others looking for a more drastic overhaul. Based on recent comments from board member Makoto Sakurai, the central bank appears to leaning toward maintaining the status quo.
Japan’s economy stagnated in the second quarter, government economists reported last month. Consumer prices declined for a fifth consecutive month in July, putting even more pressure on policymakers to act.
In market news, Japanese stocks surged Monday in response to the latest US jobs numbers. As of 2:30 am GMT, the Nikkei 225 Index was up more than 200 points or 1.3%. Tokyo’s Topix Index was also up 1%.
The Japanese yen also weakened Monday. Trading volumes in the forex market are expected to remain relatively thin as North American markets remain closed for Labour Day.
Source: Economic Calendar
