2018.02.2819:01:00UTC+00BOJ’s Kuroda: Policy Normalization Process to be ‘Very Gradual’

Bank of Japan Governor Haruhiko Kuroda said that once the country's central bank begins to normalize policy the process would take a 'very gradual' pace and that the BOJ would focus on any threats to the economy.

Addressing the lower house of the parliament, the BOJ chief said that the central bank would not push on with its aggressive monetary easing when inflation hits its price target and the economy was expanding at a stable rate. He adds that the process of normalizing policy would also take economic conditions into account.

A total exit from QE is likely far from present time because core consumer prices advanced only 0.9 percent in January from the same period a year ago, significantly below target.

But economists are concerned that the quantitative easing program will continue for a long period of time that the BOJ will not have the capability to exit from the implemented policies without shaking financial markets.

Kuroda cited the U.S. Federal Reserve as an example of how a regulator can gradually exit from quantitative easing and normalize monetary policy but still continue to tightly monitor the risks to the outlook.

The BOJ has a -0.1 percent interest rate and acquires government debt to keep the 10-year JGB yields close to zero.