Thursday, March 21, 2013
DJ: Kuroda Says Expanding Easing In Terms Of Quantity 'Indispensable'
TOKYO--The Bank of Japan's new governor on Thursday renewed his pledge to expand monetary easing, saying that it is "indispensable" to increase the amount of assets the central bank buys from the market.
"There is no doubt that we need to carry out bold monetary easing both in terms of quantity and quality," Haruhiko Kuroda said at his inaugural news conference, a day after he assumed the central bank's top post.
"It is true that quantitative easing is indispensable," he added, indicating that more purchases of government bonds and other assets to pump more cash into the banking system will be a likely course of action for the BOJ.
He also said the BOJ needs to buy longer-term assets in order to lower yield curves as well as risk premiums.
"It is very desirable if we can reach our price stability target in about two years," Mr. Kuroda also said, noting that it is the central bank's duty to hit the recently introduced goal.
Reiterating his commitment to further monetary policy easing, Mr. Kuroda did little to cool speculation that the BOJ under him will move quickly to step up its offensive against deflation, breaking with the bank's traditional gradualist approach.
Hopes for action by Mr. Kuroda have already weakened the yen to its lowest levels since summer 2009, which has made Japanese exports more competitive and helped propel the Tokyo stock market to its highest mark in four and a half years.
The first BOJ policy meeting for Mr. Kuroda is scheduled for April 3-4. If Mr. Kuroda doesn't want to wait, he can convene an interim meeting--something the BOJ has not done since late 2011.
While he said it's not impossible for the central bank's policy board to convene an emergency meeting before its next gathering, he declined to comment on whether that will take place.
The markets already are taking for granted that the BOJ will expand its Y101-trillion asset-buying program by more than Y10 trillion ($104 billion) and start buying JGBs with remaining maturities of up to five years by scrapping the current upper limit of three years. Many also think Mr. Kuroda will bring forward the starting date of the bank's new "open-ended" asset purchase policy from January of next year.
Having fueled such intense speculation, Mr. Kuroda has to back up his words with action, or he could trigger a sharp reversal in the markets, analysts say.
The currency market has "priced in" so much easing in the future that "Mr. Kuroda's BOJ needs to implement additional easing worth Y60 trillion or more if it wants to keep the dollar at Y95," said Osamu Takashima, a senior currency strategist at Citigroup.