Written by Tetsushi Kajimoto
TOKYO (Reuters) – Bank of Japan Governor Haruhiko Kuroda signaled on Thursday that his bank is in no mood to exit a massive monetary stimulus program soon, after the U.S. Federal Reserve decided overnight to scale back massive asset purchases.
Speaking to reporters after a meeting with Prime Minister Fumio Kishida, Kuroda said that his institution is facing a different situation regarding the coronavirus pandemic compared to western central banks.
The Fed announced, as widely expected, on Wednesday that it will begin reducing its monthly purchases of $120 billion in Treasury securities and mortgage-backed securities at a pace of $15 billion per month, with a plan to end purchases entirely in mid-2022.
“We are continuing the monetary easing to achieve the price stability (inflation) target of 2%. On top of that, we are also implementing a special program to deal with the spread of the coronavirus infection,” Kuroda told reporters after Thursday’s meeting.
The meeting was Kuroda’s first routine meeting with the prime minister since Kishida took office last month. Kuroda said the couple discussed the conditions of the economy and financial markets inside and outside Japan, after meeting on Tuesday with Japanese finance and economic ministers, in which the three confirmed the BoJ’s commitment to achieving the 2% inflation target.
Kuroda said new infections with the coronavirus are “rapidly declining” in Japan, but the central bank will continue to support financing for financial institutions until next March.
“We will continue to control the yield curve (YCC) even after the coronavirus infection is contained. The situation in the West is different from Japan.”
Under the YCC policy, the Bank of Japan directs short-term interest rates at -0.1% and 10-year bond yields around 0%.
With consumer core inflation hovering around zero, the central bank is also buying government bonds and risky assets to achieve its elusive 2% price target.
(Reporting by Tetsushi Kajimoto; Additional reporting by Laika Kihara; Editing by Chang-ran Kim and Kenneth Maxwell)