- The 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 confirmed candidate Kazuo Ueda as the next governor to head the central bank, succeeding Kuroda, Kyodo reported.
- “Although impacted by factors such as high commodity prices, the Japanese economy has recovered as economic activity has gradually resumed,” the Bank of Japan said in its policy statement.
Bank of Japan (BOJ) Governor Haruhiko Kuroda on Thursday, May 27, 2021 at the central bank’s headquarters in Tokyo, Japan.
Bloomberg | Bloomberg | Getty Images
Japan’s outgoing central governor Haruhiko Kuroda defended the Bank of Japan’s ultra-dovish monetary stance at his latest monetary policy meeting on Friday.
The Bank of Japan kept its negative interest rate unchanged at -0.1%, broadly in line with expectations – and reiterated the central bank’s goal of keeping the 10-year Japanese government bond (JGB) yield around 0%.
The central bank has kept its benchmark interest rate unchanged since 2016 when it implemented its YCC (yield curve control) policy, which seeks to defend its target for JGBs by buying an unlimited amount of government bonds.
Kuroda was first appointed in March 2013. His current five-year term ends April 8 and is set to be replaced by new BOJ chief Kazuo Ueda. I would like to mention Ueda at the top
Kuroda has spearheaded the central bank’s ultra-dovish monetary policy over the past decade — even as global central banks have hiked interest rates in recent months to tame inflation.
The BOJ shocked global markets in December when it widened its tolerance range from 25 basis points to 50 basis points above and below its 0% target.
On Friday, the 10-year Japanese government bond yield fell to 0.441%, breaching the upper limit of the central bank’s tolerance range of 50 basis points above and below 0%. The Japanese yen weakened around 0.3% following the announcement, trading at 136.6 against the US dollar.
“Although impacted by factors such as high commodity prices, the Japanese economy has recovered as economic activity has gradually resumed,” the Bank of Japan said in its policy statement on Friday at the end of the two-day meeting.
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“Financial conditions have been accommodating overall, although corporate finances remain weak in some segments,” the central bank said.
Japan’s upper house of parliament has confirmed Ueda as the next central bank governor, Kyodo reported. This sets the stage for the Japanese government to formally appoint Ueda after approval by the lower house on Thursday.
Parliament also confirmed Shinichi Uchida and Ryozo Himino as the Bank of Japan’s next deputy governors, Kyodo said.
The central bank held back changes to its yield curve control policy and inflation target, saying it will aim to “achieve the price stability target of 2 percent for as long as it takes to stably maintain that target.”
The Bank of Japan “will continue to expand the monetary base until the annual rate of increase in observed CPI (all items excluding fresh groceries) exceeds 2 percent and remains stable above target,” it said in a statement.
Japan’s consumer price index rose 4.2% in January – the highest CPI reading in 41 years. The next report will appear on February 24th.
However, the central bank ended its statement on an upbeat note, saying the country’s economy faces further growth.
“Japan’s 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 overseas economies,” the central bank said.
“Japan’s economy is projected to continue growing at a pace above its potential growth rate,” it said.