BoJ's Kuroda: Will continue powerful monetary easing to help economy recover from covid-induced slump
30.05.2022, 01:40

BoJ's Kuroda: Will continue powerful monetary easing to help economy recover from covid-induced slump

The Bank of Japan's governor Haruhiko Kuroda said that the central bank will continue powerful monetary easing to help the economy recover from a covid-induced slump.

Key quotes

  • Rapid yen moves seen until recently undesirable.
  • FX market regaining stability.
  • A quarter of import price gains in April was caused by yen weakening s caused by yen weakening.

These comments follow those from Friday when Kuroda said Japan's core consumer inflation will likely remain around the central bank's 2% target for 12 months unless energy prices drop sharply.

However, he is of the mind that prices likely would not rise "sustainably and stably" unless accompanied by wage hikes, suggesting the recent increase in inflation alone would not lead to an immediate withdrawal of monetary stimulus.

Market implications

Kuroda's warnings about FX market volatility are not regarded as the signal for BoJ forex market intervention at this stage. "Excess volatility in a short term as seen recently is undesirable," Kuroda told Japan's upper house of parliament last week. He would keep close watch on the impact of currency moves on Japan's economy and prices, he said.

The yen has been carving out its comeback vs. the greenback since the late April highs and Japanese fundamentals have had little to do with the moves. The greenback has been the driver and investors have started to look elsewhere for economic growth and fire rates as a chorus of central banks turn less dovish and set out a road map for higher interest rates.

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