Bank of Japan’s Kuroda seeks ‘stably low’ rates
TOKYO (JAPAN) – Bank of Japan Governor Haruhiko Kuroda reiterated on Friday the need to keep the interest rates “stably low” in order to protect the COVID-hit economy, warning that uncertainty plagued prospects for a recovery.
He said the central bank was already flexibly buying exchange-traded funds (ETF) as per current guidelines and pointed to a slowdown in buying as Japanese stock prices hover at multi-year highs.
“It’s important now to keep the entire yield curve stably low as the economy suffers the damage from COVID-19,” Kuroda told lawmakers when asked if the bank would permit long-term rates to deviate further from its target of 0%.
“The BOJ has no intention of pushing up (10-year bond yields) above its target of around 0%,” he said.
This came amid expectations of higher inflation and big US fiscal spending sending global bond yields rising, pushing up the yield on the benchmark 10-year Japanese government bonds (JGB) to 0.175%.
It was the highest since January 2016, when the central bank started negative interest rates.
Under its policy of yield curve control, the BOJ guides short-term rates at -0.1% and 10-year JGB yields around zero.