MNI POLICY: BOJ Kuroda: To Cooperate With Govt; Act If Needed

The Bank of Japan will continue to cooperate with the government following the change of prime minister, working to overcome the impact of the coronavirus pandemic, offering additional easy policy if needed, Governor Haruhiko Kuroda said on Thursday.

"If needed, we without hesitation will conduct additional easy policy" Kuroda told a press briefing following the latest policy decision, without elaborating on how and when the BOJ would act.The governor noted that financial markets remain nervous, although tension has lessened somewhat.

Japan's longest-serving chief cabinet secretary, Yoshihide Suga, was elected as prime minister on Wednesday and is widely expected to continue with the economic policies of former PM Shinzo Abe's administration.

TO FULFILL TERM

Following speculation that he may have resigned when Abe stepped down, Kuroda confirmed Thursday he would see out the full term of his mandate that ends in April 2023.

When asked about longer-end Japanese government bond yields, Kuroda said that he sees current yield curve as appropriate and repeated BOJ purchases of JGBs aren't aimed at supporting government financing. As for 2% price target, he said, "I don't see the need of changing the 2% price," although the bank hasn't hit its goal.

The Fed's decision of allowing an inflation rate above 2% is the similar to that of the BOJ as the BOJ has pledged to increase monetary base until inflation rate stays above 2% in a stable manner, known as an "overshooting commitment."

Kuroda said the BOJ can lower the policy interest rates further if needed under yield curve control policy as the BOJ, like the Fed, aims to achieve its 2% price target 'on average'.

The governor added that foreign exchange rates should move stably, reflecting economic fundamentals and the BOJ continues to closely watch developments, including the impact on economy and prices.

Earlier in the day, the BOJ left monetary policy unchanged as it sees Japan's economy recovering moderately after the record contraction in the second quarter, with the short-term policy interest rate maintained at -0.1% and the long-term interest rate target at 'around zero percent'. The BOJ retained its forward guidance for policy rates, saying it "will closely monitor the impact of the novel Covid-19 and will not hesitate to take additional easing measures if necessary, and also it expects short- and long-term policy interest rates to remain at their present or lower levels."