TOKYO: The Bank of Japan kept monetary policy steady on Thursday and its governor said economic improvements alone would not trigger a withdrawal of stimulus, reassuring markets it will lag well behind its overseas peers in ending crisis-mode easing.
Governor Haruhiko Kuroda stressed the need to “patiently” maintain ultra-loose policy, with inflation still distant from the BoJ’s 2 per cent target despite a strengthening economy.
Kuroda also rebuffed the criticism that prolonged easing could destabilise Japan’s banking system, saying he saw no problem emerging in the financial sector, with lending on the rise.
“Our most important goal is to achieve our 2 per cent inflation target at the earliest date possible,” Kuroda told a news conference.“We won’t raise interest rates just because the economy is improving.”
As widely expected, the BoJ kept its short-term interest rate target at minus 0.1 per cent and the 10-year bond yield target around zero per cent - wrapping up a year in which the central bank made no change to policy. The decision was made in an 8-1 vote. Board newcomer Goushi Kataoka dissented for the third straight meeting, arguing that the BoJ should buy long maturity bonds so that yields for durations of 10 years and longer fall further.
In a sign of its conviction in the strength of Japan’s recovery, the BOJ revised up its assessment of capital expenditure and maintained its rosy view that the economy was expanding moderately. — Reuters
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