Japanese Governor Kuroda: "There is room for additional rate cuts... Japanese economy is not in deflation" (Comprehensive)

Indicates Possible Further Expansion of Negative Interest Rate Range
However, Immediate Additional Cuts Are Not Necessary

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Eunbyeol Kim] Haruhiko Kuroda, Governor of the Bank of Japan (BOJ), stated on the 14th that "While we will not hesitate to implement additional easing measures if necessary, it does not seem necessary to lower the policy rate further at the current situation."

On the same day, Governor Kuroda said during a webcast related to the BOJ's pandemic response, "There are various ways to implement additional easing measures," adding, "This includes quantitative easing (QE) as well as further lowering of the negative interest rate." He also mentioned that there is still room to lower rates, suggesting the possibility of additional rate cuts by the BOJ.

However, he added that there is no immediate need to lower rates further at this time.

The BOJ is currently using a policy that controls the yield curve (the difference between short- and long-term interest rates). Through aggressive asset purchases, the short-term interest rate is maintained at -0.1%, and the long-term interest rate at around 0%. He explained, "Yield curve control allows economic policies to operate more efficiently."

He also added that the Japanese economy has not fallen back into deflation and is expected not to experience deflation again. However, since a 2% level of inflation is not expected to occur, accommodative monetary policy can be maintained.

Governor Kuroda acknowledged that the Japanese economy has been severely impacted by the novel coronavirus disease (COVID-19), and that the burden on companies remains significant. However, he added that economic activity could revive starting from the second quarter. He evaluated that Japan's financial market is currently very stable and emphasized, "The most important thing now is to provide companies with the necessary funds through the banking system and to maintain stability in the financial market."

This content was produced with the assistance of AI translation services.