Kuroda, Governor of the Bank of Japan, "Maintain Large-Scale Monetary Easing Even After COVID-19 Recovery"

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Hyunwoo Lee] Haruhiko Kuroda, Governor of the Bank of Japan, stated that he will adhere to the existing policy of maintaining large-scale monetary easing even after the resolution of the COVID-19 pandemic, despite the U.S. Federal Reserve's (Fed) commencement of tapering asset purchases. As central banks around the world are expected to reverse their quantitative easing stances following changes in U.S. policy, the Japanese government's official announcement to maintain its quantitative easing stance is anticipated to influence the monetary policies of neighboring countries.

According to local Japanese media such as NHK on the 4th, Governor Kuroda held a meeting with Prime Minister Fumio Kishida at the Prime Minister's Office on the same day. During the meeting, Kuroda reportedly conveyed to Prime Minister Kishida his intention to continue large-scale monetary easing by keeping short-term interest rates negative and suppressing long-term interest rates around 0% to achieve the 2% inflation target. This was the first time Prime Minister Kishida met Governor Kuroda since his inauguration on the 4th of last month.

At a press conference following the meeting with Prime Minister Fumio Kishida, Governor Kuroda said, "The situations in Europe, the U.S., and Japan are somewhat different," and added, "We will maintain the current easing policy even after the resolution of COVID-19." He further emphasized, "Although the number of new COVID-19 cases in Japan is decreasing, support for financial liquidity will continue until March next year."

Earlier, on the 2nd, Governor Kuroda met with Finance Minister Shunichi Suzuki and Minister for Economic Revitalization Daishiro Yamagiwa, where he reaffirmed the commitment to the "2% inflation target" jointly declared by the Japanese government and the Bank of Japan in 2013 to escape deflation. In Japan, where low growth and low inflation have persisted for a long time, the central bank has set a goal to raise the inflation rate to 2%, but this target has yet to be achieved.

Previously, on the 28th of last month, the Bank of Japan decided at the Policy Board and Monetary Policy Meeting to keep short-term interest rates at -0.1% and to maintain large-scale monetary easing by purchasing long-term government bonds without an upper limit to guide the 10-year government bond yield, a long-term interest rate indicator, around 0%.

Additionally, in the "Economic and Price Outlook" report released on the same day, the Bank of Japan lowered its forecast for this year's real Gross Domestic Product (GDP) growth rate by 0.4 percentage points from the July projection to 3.4%, and reduced the inflation forecast from 0.6% to 0.0%. The continued consumption slump due to the spread of COVID-19 and the semiconductor supply shortage negatively impacting exports and production are analyzed as the reasons behind the downward revisions of the GDP growth and inflation forecasts.

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