Kuroda: BOJ's December policy decision 'was not wrong' By Investing.com

Core PCE, income and spending, consumer sentiment: 3 things to watch

Kuroda: BOJ's December policy decision 'was not wrong'

Economy Jan 20, 2023 23:21

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Kuroda: BOJ's December policy decision 'was not wrong'

By Scott Kanowsky

Investing.com -- Bank of Japan governor Haruhiko Kuroda defended the central bank's decision to widen its yield curve control band in December, saying the move was designed to improve bond market functioning and not a sign that it will step away from its long-standing ultra-loose monetary policy.

Speaking at a panel at the World Economic Forum in Davos, Kuroda - who is expected to step down as governor later this year - said the BOJ's expansion of its allowable 10-year yield band to between -0.5% and 0.5% last month "was not wrong."

He stressed as well that the BOJ would continue to pursue an "extremely accommodative" policy in order to achieve its 2% inflation target in a "sustainable" manner. Kuroda argued that the BOJ predicts that recently elevated inflation in Japan will begin to abate "probably from February" this year, and eventually dip below 2% over 2023 "as a whole." He added that Japan's economy is still recovering from the pandemic.

Japanese inflation stands at a 41-year high of 4%, as volatile commodity prices and a relatively weaker yen ramp up the cost of raw material imports.

Kuroda's comments also come after the central bank kept overnight interest rates unchanged at -0.1% earlier this week and maintained the rate of yield curve control, defying many market expectations for a more hawkish policy shift.

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