"Kuroda has to put on a brave face and say that this is expected and nothing is too unusual"
- Izumi Devalier, Japan economist at HSBC Holdings Plc
The Bank of Japan led by Haruhiko Kuroda pledged to introduce shifts in its record quantitative programme as the increase in the nation's bonds is highlighting risks linked to policy makers' campaign to boost growth in the world's third-largest economy. According to the BoJ Governor, the bank will conduct its debt purchases in a flexible manner, and assured that the volatility in government's securities is not affecting the recovery. He also confirmed his commitment to double the monetary base and reach the 2% inflation target within two years.
"Kuroda has to put on a brave face and say that this is expected and nothing is too unusual," said Izumi Devalier, Japan economist at HSBC Holdings Plc in Hong Kong. "If it sounds like he is wavering or the BOJ is getting scared about the impact of its bond buying program," investors may question the central bank's commitment to its policies, she said.
"If abrupt moves in yields continue, that will influence companies' ability to raise funds," Hiromasa Yonekura, the chairman of Sumitomo Chemical Co. and head of Keidanren, Japan's biggest business lobby, said at a press conference on May 20. The government should "contain the volatile moves" while also being clear about "its commitment to achieve fiscal health," he said.
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