BOJ’s Kuroda: Inflation still distant from central bank’s target

BOJ’s Kuroda: Inflation still distant from central bank’s target

Comments by Bank of Japan governor Haruhiko Kuroda

  • It’ll take some time to change deflationary mindset
  • Japan economy making steady progress towards target
  • Too soon to discuss exit (from easing policies) as it could confuse markets
  • BOJ hasn’t reached point to consider exit
  • Exit tools, sequence could change over time
  • BOJ has tools to exit while keeping market stable
  • Ways of exit depends on economy, inflation, financial conditions at the time
  • Hard to talk about specifics of exit currently
  • Impact of 2019 planned sales tax hike likely smaller than that of 2014
  • No need to worry about economic bust after 2020 Olympics
  • Plans to see out new five-year term
  • No discussion with PM Abe on specific further easing
  • BOJ will need to progress towards normalisation eventually

Kuroda an the BOJ has been touching quite a bit on exit policy and the timing of it – though they are rightfully being vague about it. But it’s a rhetoric that the market will have go grow accustom to now.

As he is reappointed for a second term,
he can’t just continue to talk about easing policies and the deflationary mindset. I’m very sure Abe would’ve made it clear that he has to show belief that the inflation target can be met.
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