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Kuroda says BOJ can achieve smooth exit from loose money policy -Breaking


© Reuters. FILE PHOTO A man in a mask walks by the Bank of Japan headquarters during the COVID-19 outbreak that erupted in Tokyo, Japan on May 22, 2020. REUTERS/Kim Kyung Hoon

By Leika Kihara

TOKYO, Reuters -Bank of Japan Governor Haruhikokuroda stated on Thursday that the bank could execute a smooth withdrawal from its loose monetary policy. However, it would not be an easy task.

Kuroda reiterated his belief that the central bank should maintain an ultra-easy policy. Consumer inflation is expected to slow down next year, although it will speed up towards its 2% target in 2015 due to rising energy prices.

He said that the BOJ’s board would plan an exit strategy from its current policy when the time is right and will make it available to the public.

Kuroda stated that the key was to increase interest rates while scaling back the BOJ’s expanding balance sheet.

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The BOJ has the ability to combine different means in order to ensure that markets are stable while executing an easy exit. He said that it would not be simple.

On Thursday, the yen briefly rose by more than half of a yen to 126.61/dollar. Last time it was at 126.85, 0.4% higher.

Kuroda indicated that U.S. Federal Reserve interest rate hikes may not weaken the dollar against the yen further, but they could also reduce U.S. shares prices.

Fumio Kishida, Prime Minister of Japan, stated that it was difficult to predict whether or not the weakness in the Japanese yen would last a while.

Sharp (OTC) yen movements are not desirable. Kishida explained that while a weakening yen can be a boon for firms and exports with foreign assets, it also hurts some households and businesses by higher prices.