Kuroda of the Bank of Japan discusses the possibility of exit from ultra-loose policy

According to Haruhiko Kuroda, Governor of the central bank of Japan, any upcoming disputes over a change in the course of the ultra-loose monetary policy will be associated with the pace of growth in short-term interest rates and adjustment of the bank's balance sheet.

At the same time, the head of the Bank of Japan noted that the recovery of the economy through an ultra-loose monetary policy should be continued by the central bank, eliminating the possibility of an increase in interest rates in the coming months.

However, Kuroda said that the Bank of Japan could return to discussing a strategy of abandoning large-scale stimulus, moving towards  policy normalization, if the achievement of the 2% inflation target, accompanied by wage increases, becomes real.

In his opinion, it is too early to disclose the details of the strategy, but it is safe to say that the central topic of discussion will be the rate of increase in the short-term interest rate, which is at around -0.1% at the moment.

Kuroda added that the adjustment of balance sheets will be another important subject of discussion, since the first step of the top central banks’ tightening policy was to raise interest rates, and the next was to reduce balance sheets.

The head of the BOJ said that wages could rise in the future, as companies face a growing shortage of staff and rising costs of living, despite the fact that the prospects remained quite vague.

He also noted that it is extremely important for the central bank to support the state's economy with the help of an ultra-loose monetary policy, thereby creating the necessary conditions for companies to raise wages.