MATSUMOTO, NAGANO PREF. – The Bank of Japan will not hesitate to pull the trigger on additional monetary easing if a drastic global downturn threatens the bank’s efforts to achieve its inflation goal, a BOJ board member said Wednesday.
“Japan remains far from reaching its limit in monetary easing policy,” Policy Board member Yutaka Harada said in a speech in Matsumoto, Nagano Prefecture. Harada appeared to dismiss concern in some quarters that the BOJ has exhausted its options.
At a policy meeting in September, the advocate of aggressive easing voted to shift the central bank’s policy focus to controlling yield curves instead of greater asset buying.
But some economists said Harada’s remarks are unlikely to fuel expectations that the BOJ will loosen its monetary grip when the Policy Board meets through Nov. 1.
BOJ Gov. Haruhiko Kuroda said last week that the central bank is ready to conduct additional monetary easing if necessary, but he said the nation’s moderate economic recovery does not warrant action at present.
The bank does not think it necessary “at this stage” to tinker with a negative 0.1 percent rate on some reserves that commercial banks park at the BOJ, Kuroda said in Washington.
At the latest meeting, the BOJ decided to modify the framework of its bond-buying program to keep the yield of bellwether 10-year government debt at around zero percent, while leaving its negative policy rate unchanged at minus 0.1 percent.
Kuroda has said deepening a key negative interest rate would be a “main policy tool” and cutting the target level of a long-term interest rate could also be a way to attain 2 percent inflation.
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