BoJ Governor Haruhiko Kuroda delivered a speech to business leaders in Nagoya today. There he acknowledged that “the BOJ fully recognizes that, by continuing monetary easing, financial institutions’ strength will be cumulatively affected.” And, even though, “these risks are judged as not significant at this point”, he pledged to “scrutinize developments and encourage financial institutions to take action as necessary.”
US-China trade war is one of the risks surrounding Japan’s outlook. Kuroda said “the impact of such problems on Japan’s economy is limited for now … ut if the problems persist, the effect on Japan’s economy could become bigger”.
Overall, Kuroda reiterated that “it’s necessary to persistently continue with powerful monetary easing, while considering both the positive effects and side effects in a balanced manner.” But BoJ will “of course” exit ultra-easy monetary policy when the 2% price target is reached.
