TOKYO, April 4 Bank of Japan Governor Haruhiko
Kuroda said on Thursday the central bank took all steps
available and deemed necessary at its Thursday policy meeting to
achieve its new 2 percent inflation target in two years.
At Kuroda's first meeting as governor, the central bank
surprised markets with a radical overhaul of its policymaking,
adopting a new balance sheet target and pledging to double its
government bond holdings in two years.
The following are highlights of Kuroda's comments at a news
conference after the policy meeting:
REGIME CHANGE IN MONETARY POLICY
"The previous approach of incremental easing wasn't enough
to pull Japan out of deflation and achieve 2 percent inflation
in two years.
"This time, we took all necessary steps to achieve the
"As the economy and financial markets are living things, we
will not hesitate to adjust policy as needed. But at present we
decided on all necessary steps that are needed to achieve the 2
percent price stability target in two years."
"We can achieve economic expansion and price hikes towards 2
percent so we concluded that there's no need to scrap interest
paid to excess reserves parked at the BOJ."
"I realise that we are embarking on a huge purchase of
government debt. Based on what we've decided today, our monthly
purchases of government debt will total about 70 percent of
newly issued debt.
"Communicating with market participants will be more
important than ever to ensure that we can buy all this debt
"The BOJ's easing is aimed at achieving our 2 percent
inflation target with operations in the JGB market, which is a
very deep and liquid market. I have no intention to monetise
"According to the joint statement that the BOJ and the
government issued, the government needs to maintain trust in
fiscal policy, so I strongly expect the government to take steps
to maintain trust in fiscal policy."
"I am not worried about a spike in long-term yields or an
asset price bubble. The chance of this happening is actually
"I don't think there is a bubble in the government bond
"I don't anticipate big side-effects from the policies we've
"I don't expect our JGB purchases to distort the market.
What we're doing is expanding our purchases to encompass all
zones of the yield curve, and I don't expect we'll have any
difficulty doing this.
"When it's time to exit our policy, we will be holding a lot
of JGBs, but I don't expect this to immediately lead to
"At this time, there is a risk that yields could rise, but I
don't expect this to lead to losses on the BOJ's balance sheet."
"The BOJ as central bank is always looking at potential side
effects and other impacts (from monetary easing). But at this
point, we have no such concerns as a spike in long-term interest
rates and mounting asset bubble.
"We will proceed (with monetary easing) taking into account
risks and side effects, but at the moment we see no severe
drawback emerging immediately."
MONETARY EASING AND CURRENCIES
"As the central bank, it is beyond our remit to make
specific comments about currencies.
"However, I can say that, in general, when a country eases
monetary policy aggressively, their currency tends to weaken.
"ETFs are backed by shares so in a sense it has a
potentially huge market. Considering the current situation,
there's more room to narrow risk premium, so we decided to
double ETF purchases."
"We will continue to debate the BOJ semi-annual economic and
price outlook report at the policy board as before."
"From the standpoint of economics, monetary base is the
easiest target to understand ... Monetary base is the most
academically established gauge of the central bank's fund