BoJ Governor Haruhiko Kuroda reiterated the central bank’s forward guidance that “there’s a good chance current low interest rates will be maintained beyond (the spring of 2020) depending on future developments”. In a speech he emphasized “when we say we will keep rates low for an extended period of time, we mean it will be maintained for quite a long time.”

On the economy, Kuroda expects it to continue to expand moderately. Though, “if overseas growth takes longer than expected to pick up, Japanese companies – manufacturers in particular – could become cautious about spending on capital expenditure”.

While the economy is facing some risks, Kuroda dismissed that the so called “Modern Monetary Theory” as being a “wrong idea”. He said “when a central bank monetizes debt unlimitedly, it will most certainly trigger hyper-inflation and cause huge damage to the economy.” And, “it’s a common understanding among central banks of advanced economies that they ought not monetize debt.

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Kuroda’s full speech here.

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