Bank of Japan Governor Haruhiko Kuroda signaled the need to maintain ultra-easy monetary policy and clarified that his recent remarks on so-called "reversal rate" theory did not indicate a move toward tightening in 2018, Bloomberg News reported Dec. 4.
When asked about his "reversal rate" comments last month, which triggered speculation that the current super-easy monetary policy may start to be normalized, Kuroda said the BOJ's yield-curve control program has been successful and has not caused headaches for banks. According to the reversal rate theory, excessively low rates could squeeze bank profits and reduce their ability to lend, which counters the goals of monetary easing.
"During my speech at the University of Zurich, I mentioned the reversal rate and other academic arguments, but as I said, our strategy already changed in September last year," Kuroda, who was speaking at a Tokyo conference on Dec. 4, reportedly said.
Kuroda said the BOJ needs to maintain an "extremely" easy monetary policy, since inflation has not nearly reached the 2% price target. He also promised to implement additional monetary easing if the current price momentum looks to lose steam.
"I would like to emphasize that the current yield-curve control has been quite successful and we will continue the current framework in order to achieve the 2 percent price target," Kuroda said.
His comments came after reports of a possible earlier wind-down of stimulus.