- The current governor Kuroda was first appointed in March 2013 and has led the central bank’s tight monetary policy since 2016.
- Kyodo reported that the Japanese Senate has approved nominee Kazuo Ueda to be the next governor to lead the central bank to succeed Kuroda.
- “The Japanese economy, although affected by factors such as rising commodity prices, has rebounded as the resumption of economic activity progresses,” the Bank of Japan said in its policy statement.
Haruhiko Kuroda, Governor of the Bank of Japan (BOJ), at the central bank headquarters in Tokyo, Japan, on Thursday, May 27, 2021.
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Outgoing Central Bank of Japan Governor Haruhiko Kuroda defended the Bank of Japan’s hawkish monetary policy stance at its latest monetary 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 target of keeping the yield on 10-year Japanese government bonds (JGB) around 0%.
The central bank has kept its benchmark interest rate unchanged since 2016, when it implemented the yield curve control (YCC) policy, which seeks to defend its target on Japanese government bonds by buying an unlimited amount of government bonds.
Kuroda was first appointed in March 2013. His current five-year term will expire on April 8, and he is slated to be replaced by incoming Bank of Japan President Kazuo Ueda.
Kuroda has led the central bank’s ultra-tight monetary policy for the past decade – even as global central banks in recent months have raised interest rates in an effort to tame inflation.
The Bank of Japan shocked global markets in December when it widened its tolerance range to 50 basis points above and below its 0% target – up from 25 basis points previously.
On Friday, the yield on 10-year Japanese government bonds fell to 0.441%, below the upper end of the central bank’s tolerance range of 50 basis points above and below 0%. The Japanese yen fell around 0.3% after the announcement and was trading at 136.6 against the US dollar.
“Although the Japanese economy was affected by factors such as rising commodity prices, it has rebounded with the progress of the resumption of economic activity,” the Bank of Japan said in its policy statement. statement On Friday the two-day meeting concluded.
The central bank said: “Financial conditions were generally favorable, despite the continued weakness of corporate financial positions in some sectors.”
Kyodo reports that Japan’s upper house of parliament has approved Ueda to become the next central bank governor. This clears the way for the Japanese government to formally appoint Ueda following approval by the House of Representatives on Thursday.
Kyodo said parliament also approved Shinichi Uchida and Ryuzo Himeno for the posts of deputy governors of the Bank of Japan.
The central bank halted changes to its yield curve control policy and inflation target, saying it would aim “to achieve the price stability target of 2 percent, for as long as necessary to maintain this target in a stable manner.”
“The Bank of Japan will continue to expand the monetary base until the annual rate of increase in the observed consumer price index (all items except fresh food) exceeds 2 percent and remains above the target in a stable manner,” He Said in the current situation.
Japan’s CPI rose 4.2% in January – the highest CPI reading in 41 years. The next report is due on February 24.
However, the central bank ended its statement on an optimistic note, and said that more growth awaits the national economy.
“The Japanese economy is likely to recover, as the impact of COVID-19 and supply-side constraints fade, although it is expected to come under downward pressure from rising commodity prices and a slowdown in overseas economies,” the central bank said.
“The Japanese economy is expected to continue to grow at a rate higher than its potential growth rate,” she said.
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