Kaiser Hoffman Capital Reports BoJ’s Kuroda Reaffirms Commitment To Stimulus
Added: (Wed Aug 31 2016)
Pressbox (Press Release) -
Bank of Japan’s Governor says no hesitation to using additional stimulus to achieve inflation target.
Governor of the Bank of Japan, Haruhiko Kuroda reaffirmed the central bank’s readiness to expand its use of monetary stimulus in order to achieve its 2% inflation target despite the policy’s ineffectiveness in the last 4 years.
Speaking at the Federal Reserve Bank of Kansas City’s annual summit, Mr. Kuroda said the Bank would act “without hesitation” to achieve its 2% inflation objective. The Bank is widely expected to act when it next meets in September against a backdrop of weakening growth and consumer spending.
Asked whether the Bank had considered amending its inflation target, the Governor replied that he and his monetary policy committee had no intentions of varying the target to either the upside or downside.
“The Bank of Japan has seen its efforts over the years evaporate as the Japanese yen has strengthened in response to investors seeking to hold the currency as a safe-haven and because of its appeal as a funding currency for carry trades,” said Henry Holt, Chief Economist at Kaiser Hoffman Capital.
“If the yen should strengthen to less than 98 to the US dollar, we’d expect to see the Bank add a massive quantitative easing initiative designed to drive it back above 100 and we’d expect the equity market to rise sharply,” he explained.
Kaiser Hoffman Capital says it remains bullish on Japanese stocks but is less so on the Japanese economy. “Only meaningful fiscal stimulus is going to boost the Japanese economy at this stage. Monetary policy has reached the end of its usefulness,” concluded Holt.