"Kuroda should have explained why the market is volatile now and why he thinks it's going to be ok, rather than just saying he doesn't see any major problem"
-Kazuhiko Ogata, chief Japan economist at Credit Agricole SA
The Bank of Japan Governor Haruhiko Kuroda sees no signs of "excessively bullish expectations" in asset markets and believes that the nation is able to withstand increasing interest rates. While the central bank's ultra-loose monetary policy is indented to bring interest rates down, a rise of 3 points in yields could be acceptable, without causing financial instability. The comments by the Governor came after the stocks tumbled Thursday by the most since the earthquake in March 2011, while 10-year yields touched 1%, more than triple the historic low on April 5.
Volatility in stock and bond markets threaten to damp confidence in the Prime Minister Shinzo Abe and the Governor Haruhiko Kuroda campaign to combat a 15-year deflationary malaise. Hence, members of the BOJ' monetary policy board agreed that it was necessary to expand the monetary easing that had been put in place, according to the minutes from the meeting on April 26. The central bankers are determined to continue with asset-buying scheme until inflation reaches the desired goal of 2% within two-year time as the world economies recover. Also at the meeting the BOJ kept its benchmark interest rate at the record low of 0 to 0.10%.
© Dukascopy Bank SA