JACKSON HOLE, WYOMING – Bank of Japan Gov. Haruhiko Kuroda said Saturday that he won’t hesitate to boost monetary stimulus if needed, reiterating a pledge during an annual policy retreat in Jackson Hole, Wyoming, at which central bankers stressed their need for backup from fiscal policy.
“There is no doubt that there is ample space for additional easing in each of the three dimensions,” Kuroda said, referring to the BOJ’s package of asset buying, monetary-base guidance and negative interest rates. “The bank will carefully consider how to make the best use of the policy scheme in order to achieve the price stability target,” he told the Federal Reserve Bank of Kansas City’s symposium.
Central bankers, struggling to spur persistently disappointing growth, gathered in Grand Teton National Park to debate how best to tackle low inflation despite having already cut interest rates to near zero or, in some cases, below zero. They heard Fed Chair Janet Yellen on Friday describe future potential options to jump-start the economy while saying that the case for a U.S. rate hike had strengthened.
Even though the Bank of Japan is currently engaged in a review of its monetary-policy settings, due for completion in September, Kuroda’s comments underline his stance that the exercise won’t mean any reduction in stimulus despite growing doubts about its effectiveness.
“One of the key elements of our policy is to push up inflation expectations to our price stability target and anchor them there,” Kuroda said. “The Bank of Japan will continue to carefully examine risks to activity and prices at each monetary policy meeting and take additional monetary policy measures without hesitation.”
The BOJ’s next policy meeting is Sept. 20 and 21.
Benoit Coeure, European Central Bank executive board member, said during the same panel that his institution may also have to take further monetary measures if governments don’t act to boost long-term growth. “We will fulfill the price stability mandate given to us,” Coeure said. “But if other actors do not take the necessary measures in their policy domains, we may need to dive deeper into our operational framework and strategy to do so.”
While slowing growth and inflation present difficulties for central banks around the industrialized world, the Frankfurt-based ECB has particular cause to urge pro-expansion measures by the 19 nations that use the euro. High unemployment, political spats and banking systems loaded with soured loans are hampering the region’s recovery from a debt crisis that started six years ago.
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