TOKYO – Bank of Japan Governor Haruhiko Kuroda said on Thursday the central bank took all steps available and deemed necessary at its Thursday policy meeting to achieve its new 2 percent inflation target in two years.
At Kuroda's first meeting as governor, the central bank surprised markets with a radical overhaul of its policymaking, adopting a new balance sheet target and pledging to double its government bond holdings in two years.
The following are highlights of Kuroda's comments at a news conference after the policy meeting:
REGIME CHANGE IN MONETARY POLICY
"The previous approach of incremental easing wasn't enough to pull Japan out of deflation and achieve 2 percent inflation in two years.
"This time, we took all necessary steps to achieve the target."
"As the economy and financial markets are living things, we will not hesitate to adjust policy as needed. But at present we decided on all necessary steps that are needed to achieve the 2 percent price stability target in two years."
"We can achieve economic expansion and price hikes towards 2 percent so we concluded that there's no need to scrap interest paid to excess reserves parked at the BOJ."
"I realize that we are embarking on a huge purchase of government debt. Based on what we've decided today, our monthly purchases of government debt will total about 70 percent of newly issued debt.
"Communicating with market participants will be more important than ever to ensure that we can buy all this debt smoothly.
"The BOJ's easing is aimed at achieving our 2 percent inflation target with operations in the JGB market, which is a very deep and liquid market. I have no intention to monetize government debt.
"According to the joint statement that the BOJ and the government issued, the government needs to maintain trust in fiscal policy, so I strongly expect the government to take steps to maintain trust in fiscal policy."
"I am not worried about a spike in long-term yields or an asset price bubble. The chance of this happening is actually very small.
"I don't think there is a bubble in the government bond market."
(Reporting by Stanley White; Editing by Kim Coghill)