January 25, 2019 / 11:14 AM / a month ago

Bank of Japan's Kuroda says demographic changes could make central bank's job difficult

FILE PHOTO - Bank of Japan (BOJ) Governor Haruhiko Kuroda attends the Paris Europlace International Financial Forum in Tokyo, Japan, November 19, 2018. REUTERS/Toru Hanai

DAVOS, Switzerland (Reuters) - Bank of Japan Governor Haruhiko Kuroda said on Friday changes in demographics, such as an aging population, could make the central bank’s job difficult by lowering the economy’s long-term growth rate.

“If the long-term growth rate declines, together with demographic changes, the natural rate of interest will decline and increase risk for central banks facing a zero lower bound,” Kuroda said in a seminar at the World Economic Forum in Davos.

He also said an aging society could lead to weaker credit demand, pushing financial institutions to take on more risk in search of higher yields and potentially destabilizing the financial system.

Reporting by Leika Kihara, editing by Silvia Aloisi

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