"Kuroda really doesn't want the BOJ to be seen as going back to the era of gradualism"
- Hiroshi Shiraishi, senior economist at BNP Paribas SA
The Bank of Japan decided to refrain from expanding its tools to address bond-market volatility, sticking to its previously announced plan to double the monetary base to end decades of deflation and stoke growth. Even though a lack of fresh measures was widely expected, some market participants hoped Japanese central bank would extend the duration of its ultra-low interest rates to banks. However, Haruhiko Kuroda, current Governor of the BoJ, assured that policy makers will consider fresh steps to calm markets in case borrowing costs will spike again in the nearest future.
Kuroda also raised the official assessment of the economy, as the economic growth in the first quarter was faster than previously thought and the current account surplus showed a rapid growth. Japanese policy makers stuck with April's pledge to increase the monetary base by 60 to 70 trillion Yen per year, and on Tuesday Kuroda mentioned the BoJ has more scope to increase its purchases of exchange-traded funds than of the nation's real-estate investment trusts. He also said that 3.15 trillion Yen a year in a form of loans will be extended to 70 major and regional banks on June 20 through a programme introduced by former Governor Masaaki Shirakawa.
© Dukascopy Bank SA