BOJ chief vows to maintain ultra-low interest rates

A man wearing a face mask walks past the Bank of Japan headquarters in Tokyo on May 22, 2020. KAZUHIRO NOGI AFP TOKYO Bank of Japan Governor Haruhiko Kuroda stressed the need to maintain ultra-low interest rates and brushed aside the possibility of reviewing the bank's monetary policy framework, an idea recently proposed by one of its nine board members.

The BOJ is trying to meet its 2 percent inflation target backed by wage growth. Kuroda told the parliament that they believe that this will take more time.

He said it was premature to talk about specifics about our monetary policy framework.

Kuroda made a statement in parliament when asked about BOJ board member Naoki Tamura's recent comments that the central bank should review its monetary policy framework and tweak its massive stimulus program based on the outcome.

Kuroda said that the BOJ would discuss an exit strategy from ultra-loose policy when achievement of 2 percent inflation comes into sight, and that it would communicate its plan to markets at an appropriate time.

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Under yield curve control YCC the BOJ sets a 0.1 percent target for short-term interest rates and caps the 10 year bond yield around 0 percent as part of its efforts to achieve its 2 percent inflation target.

The BOJ's aggressive bond buying to defend the yield cap has been criticized by investors as draining bond market liquidity and distorting the shape of the yield curve.

Markets are rife with speculation that the BOJ could tweak YCC and allow long term rates to rise more when Kuroda's term ends in April next year.

Kuroda stated that the 3.6 percent rise in core consumer prices in October was driven by soaring import costs and that inflation would slow back below the BOJ's 2 percent target next fiscal year.

Kuroda said that the benefits of the BOJ's stimulus still outweigh the costs because of the fact that we'll maintain our current monetary policy to make it easier for companies to raise wages.