TOKYO. —Bank of Japan Governor Haruhiko Kuroda voiced optimism over the health of the U.S. economy in a meeting with Prime Minister Shinzo Abe on Wednesday.
In his first such meeting since September, Kuroda said he received no particular requests from the premier on monetary policy and that there was no specific discussion about U.S. President-elect Donald Trump.
“Today’s meeting is one of the meetings that I regularly hold with the prime minister,” Kuroda told reporters after the meeting.
“I explained recent developments in the global economy. We did not specifically talk about Trump,” he said. Kuroda also said he told Abe the U.S. economy was growing steadily.
The BOJ has kept monetary policy steady since revamping its policy framework in September last year to one better suited for a long-term battle against deflation.
Kuroda offered an upbeat view of the economy but sought to douse market talk the central bank may soon consider raising interest rates, vowing instead to keep policy loose to achieve the BOJ’s 2 percent inflation goal.
Kuroda also said he did not see recent yen falls as a problem for Japan’s economy, saying that a weak currency helps accelerate inflation by boosting import costs and in so doing raise inflation expectations - a crucial element in the BOJ’s plan to beat economic stagnation.
“We are still distant from our 2 percent inflation target. It’s therefore appropriate to continue with powerful monetary easing,” Kuroda told a news conference on Tuesday.
“It’s absolutely not the case that Japanese government bond yields are allowed to rise in tandem with overseas long-term interest rates, or that (any such rise in Japanese yields) would prompt us to raise our yield targets.”
Kuroda’s remarks came after the BOJ’s widely expected decision to keep unchanged its pledge to guide short-term rates at minus 0.1 percent and the 10-year government bond yield around zero percent.
Japanese long-term interest rates have risen in tandem with global bond yields on expectations of steady U.S. interest rate hikes and the perceived inflation-stoking policies of incoming U.S. President Donald Trump.
This has tested the BOJ’s resolve to cap the 10-year Japanese government bond (JGB) yield around its target. That in turn has led to some market expectations the BOJ may raise its target for the 10-year JGB yield, which briefly hit 0.1 percent last week, as early as next year.
“Kuroda is not interested in raising the yield target and would not be bothered by further yen weakness,” said Hiroaki Muto, economist at Tokai Tokyo Research Center. – Reuters