In the semi-annual testimony to parliament, BoJ Governor Haruhiko Kuroda warned that “Japan’s economy is in an increasingly severe state”. Outlook will “remain severe for the time being.” He pledged to “do whatever we can as a central bank, working closely with the government.”
For the near term, focus of monetary policy is to “smoothen corporate financing and stabilize markets”. Though, there is no huge risk of sharp credit contraction as domestic financial institutions have sufficient capital buffers.
As for the steps to ease monetary further, he said, “we’re ready to take sufficient steps judged necessary at the time”. The measures could include expanding asset purchases, increasing market operations tools or cutting interest rates further.
