TOKYO (Reuters) — Bank of Japan Governor Haruhiko Kuroda said on Tuesday he was “quite sure” the central bank could smoothly exit from its massive monetary stimulus when the appropriate time to do so came.
But he also said the BOJ “always” had room to expand monetary stimulus to achieve its 2 percent inflation target, indicating that wages and prices had been slow to respond to improvements in the economy.
“There may be some challenging issues, but I’m quite sure the BOJ has enough tools” to manage an exit from its stimulus programme, Kuroda told a seminar hosted by the Wall Street Journal in Tokyo.
For whenever the BOJ decides to withdraw stimulus, Kuroda said there may be lessons to learn from how the U.S. Federal Reserve normalises its ultra-loose monetary policy.
“But the United States is the United States, Japan is Japan. At this stage, we’re not exiting,” Kuroda added, stressing that the BOJ was nowhere near an exit from its massive stimulus programme with inflation distant from its 2 percent target.
With inflation stubbornly stuck around zero percent, BOJ officials have stressed that any exit from massive monetary support would be some time away.
But many market participants expect the BOJ’s next move to be a withdrawal, not an expansion, of stimulus as the economy shows signs of strength, thanks to a rebound in global demand.