- Current Governor Kuroda was first appointed in March 2013 and has led the central bank’s ultra-dovish monetary policy since 2016.
- Japan’s upper house of parliament has endorsed candidate Kazuo Ueda to be the next governor to lead the central bank, succeeding Kuroda, Kyodo reported.
- “The Japanese economy, although affected by factors such as high commodity prices, has recovered as the recovery in economic activity has progressed,” the Bank of Japan said in its statement. general policy.
Haruhiko Kuroda, Governor of the Bank of Japan (BOJ), at the central bank’s headquarters in Tokyo, Japan, Thursday, May 27, 2021.
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Japan’s outgoing central governor, Haruhiko Kuroda, defended the Bank of Japan’s ultra-loose monetary policy at its latest policy meeting on Friday.
The Bank of Japan left its negative interest rate unchanged at -0.1%, broadly in line with expectations – and reiterated the central bank’s goal of keeping the Japanese government bond (JGB) yield at 10 years around 0%.
The central bank has kept its benchmark interest rate unchanged since 2016, when it implemented its yield curve control (YCC) policy, which aims to defend its target on JGBs by buying a number unlimited number of government bonds.
Kuroda was first appointed in March 2013. His current five-year term will end on April 8 and is expected to be replaced by new BOJ chief Kazuo Ueda.
Kuroda has led the central bank’s ultra-dovish monetary policy for the past decade – even as global central banks have raised interest rates in recent months in a bid to tame inflation.
The BOJ shocked global markets in December when it widened its tolerance band to 50 basis points above and below its 0% target, from 25 basis points previously.
On Friday, the yield on Japanese 10-year government bonds fell to 0.441%, below the upper cap of the central bank’s tolerance band of 50 basis points above and below 0%. The Japanese yen weakened about 0.3% after the announcement and was trading at 136.6 against the US dollar.
“Japan’s economy, although affected by factors such as high commodity prices, has recovered as the recovery in economic activity has progressed,” the Bank of Japan said in its statement. of politics on Friday, concluding the two-day meeting.
“Financial conditions were accommodative overall, although weakness in corporate financial positions remained in some segments,” the central bank said.
Japan’s upper house of parliament has approved Ueda to be the next central bank governor, Kyodo reported. This sets the stage for the Japanese government to officially appoint Ueda after the lower house approves it on Thursday.
The parliament also approved Shinichi Uchida and Ryozo Himino as the next deputy governors of the Bank of Japan, Kyodo said.
The central bank suspended changes to its yield curve control policy and inflation target, saying it will aim “to achieve the price stability objective of 2% for as long as necessary to maintain this objective in a stable manner”.
The Bank of Japan “will continue to expand the monetary base until the observed year-on-year rate of increase in the CPI (all items less fresh food) exceeds 2% and remains above the objective in a stable manner,” she said in a statement. statement.
Japan’s consumer price index rose 4.2% in January, the highest CPI value in 41 years. The next report is due February 24.
The central bank, however, ended its statement on an optimistic note and said further growth was ahead for the national economy.
“The Japanese economy is likely to recover, with the impact of COVID-19 and supply-side constraints easing, although it is expected to come under downward pressure from high commodity prices. and slowing foreign economies,” the central bank said.
“The Japanese economy is expected to continue growing at a rate above its potential growth rate,” he said.