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The Bank of Japan’s governor announced on Tuesday that buying five-year or longer-term government securities is one alternative for the central bank in easing financial policy, giving a new hint on what policy changes the BOJ may adopt under his leadership.
“We will consider every option,” Haruhiko Kuroda proudly says at a parliamentary session, when asked about the idea of the BOJ buying government securities with remaining maturities of five years or more.
While renewing his oath to do “whatever it takes” to beat deflation and reach the bank’s 2% inflation goal, Kuroda also pushed the administration to work to put its poor fiscal house in harmonious state.
The administration can support spur price growth by providing demand, but “it is important for it to work on medium- and longer-term fiscal rehabilitation to avoid the rush of interest rates because of the loss of confidence in fiscal management,” Kuroda added.
Appointed by Prime Minister Shinzo Abe to drive the nation’s renewed efforts to totally suppress deflation, Kuroda has promised to do “whatever it takes” to hit the BOJ’s 2% inflation goal in two years and spoken in favor of having the bank purchase more and longer-dated Japanese government debt in a bid to stimulate growth.
His opinions have been the apple of the eye of intense scrutiny by BOJ watchers, who are attempting to make a forecast on what he may propose at a planned April 3-4 policy board meeting or any interim meeting the BOJ may convene ahead of that.
Even before Kuroda formally assumed his current post about a week ago, the markets had come to take it for granted that the BOJ will expand its ¥101 trillion ($1.07 trillion) asset-purchasing program by more than ¥10 trillion and start buying JGBs with remaining maturities of up to five years by scrapping the current upper limit of three years.
Investors also view the BOJ under Kuroda’s leadership bringing advances on a plan to make its asset-purchase program “open-ended” from January next year.
