USD/JPY: No Immediate Need to Expand Stimulus Programme, BOJ’s Kuroda says

on Feb 19, 2015
Updated: Jun 1, 2022

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Bank of Japan (BOJ) governor Haruhiko Kuroda released a statement on Wednesday confirming that there were no imminent plans to expand the country’s monetary stimulus programme.

However, Mr Kuroda was quick to reassure audiences that a reversal of this policy would be considered if internal risks hindered his inflation plan.

No Immediate Need

BOJ’s Haruhiko Kuroda has vowed that the country will not expand its current stimulus programme, stating that he’s confident there is no immediate need to do so.

This means that the BOJ will continue to print money at an annual pace of 80 trillion yen rather than increasing this figure.

Mr Kuroda recognised in his speech that the oil price slump is currently placing strain on his inflation target, but he made it clear that this pressure is temporary, and as it stands places no threat on the steady progress towards his two per cent goal.

The BOJ also recognised that household spending remains sluggish in some areas, but was keen to emphasise that it was no more perturbed by this trend than by falling oil prices. The central bank reiterated that the economy continues to improve, albeit modestly, with the country on track to meet its price target, and wages and spending rising across the nation. It further pointed out that exports and output were both “picking up”, a trend sure to be exacerbated by a weak yen which has already helped to increase overseas shipments.

Kuroda’s Response to His Critics

Some commentators, however, suggested that the weakness of the yen needed to be addressed, after last October’s fall pushed up import prices and undermined consumer confidence.

Mr Kuroda dismissed their complaints, stating: “As long as exchange rates move stably in a way that reflects economic fundamentals, they shouldn’t be negative for the economy.” He backed this up by pointing out that although oil prices have continued to fall, consumption has shown promising signs of recovery, and inflation expectations have held steady.

A Flexible Approach

Mr Kuroda, who is known for his reasonable nature and sensible approach, has, however, made it clear that his existing strategy is not set in stone. The governor was keen to reassure concerned parties that the BOJ would be willing to ease this policy if internal risks such as a weakening economy and declining oil prices threaten his inflation plan.

He stated: “I don’t think there is any change in the price trend at the moment. That’s why I don’t think there is a need to do something additional.

“If there is any change in the price trend, we won’t hesitate to adjust policy.”

Only time will tell whether or not such a revision becomes necessary. For now, traders, financial institutions, and brokers like Oanda can only wait with baited breath to see how the future of the yen plays out.


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