Posted on 19/02/2019 at 8h20
The Bank of Japan (BoJ) is prepared to further soften its policy if the strong yen hurts the economy and threatens the convergence path of inflation towards the 2% target, said its governor Haruhiko Kuroda on Tuesday ( Photo). / Photo taken December 20, 2018 / More Bank / Kyodo
Thomson More Bank
The dollar appreciated slightly against the yen and Japanese bond yields eased after Kuroda's comments, which are part of a cautious approach by major central banks, including the US Federal Reserve, to the risks of economic downturn.
He pointed out, however, that the BoJ would carefully weigh the pros and cons of any further easing, implying that the BoJ was setting the bar high given the negative effects of ultra-accommodative monetary policy on the profits of Japanese banks.
"If (fluctuations in exchange rates) have an impact on the economy and prices, and if we deem it necessary to achieve our inflation target, we will consider relaxing our policy," he said. to Parliament in response to a question from an opposition MP asking if the BoJ had the tools to counter the effects of the strong yen.
Kuroda reaffirmed that the BoJ had several tools at its disposal, including lower rates in the short or long term, increased asset purchases or faster currency creation.
"Whatever we do, we will have to carefully evaluate the benefits and costs of the measure in terms of the impact on financial intermediation and the functioning of markets," he concluded.
At the end of the session in Asia, the dollar appreciated at 110.615 yen against 110.45 before hearing Kuroda.
(Leika Kihara, Véronique Tison for French service, edited by Patrick Vignal)