Kuroda says BOJ can achieve smooth exit from loose money policy

By Leika Kihara

TOKYO (Reuters) – Financial institution of Japan Governor Haruhiko Kuroda mentioned on Thursday the central financial institution can execute a easy exit from its ultra-loose financial coverage, although doing so “will not be simple”.

Kuroda repeated his view that the central financial institution should keep ultra-easy financial coverage for now, with shopper inflation anticipated to sluggish subsequent yr and past, after dashing as much as close to its 2% goal this yr due to surging vitality prices.

When the correct second comes, the BOJ’s board will plan an exit from its simple coverage and lay it out to the general public, he mentioned.

“The important thing could be tips on how to increase rates of interest and cut back the BOJ’s expanded stability sheet,” Kuroda instructed parliament on Thursday.

“The BOJ can mix varied means and guarantee markets stay steady in executing a easy exit from simple coverage. I need to add, nonetheless, that it will not be simple,” he mentioned.

The yen on Thursday briefly strengthened greater than half a yen to 126.61 to the greenback. It was final up about 0.4% at 126.85.

Kuroda mentioned rate of interest hikes by the U.S. Federal Reserve could not essentially weaken the yen towards the greenback additional, if in addition they knock down U.S. share costs.

Prime Minister Fumio Kishida instructed the identical parliament session it was laborious to say whether or not the yen’s weak spot could be short-lived or develop into extended.

“Sharp yen strikes are undesirable. Whereas a weak yen advantages exports and corporations with abroad property, it hurts households and a few companies through greater prices,” Kishida mentioned.

(Reporting by Leika Kihara; Modifying by John Stonestreet and Tom Hogue)