“The price growth in Japan is still not strong enough”, Abe said during a parliamentary hearing confirming the importance of maintaining the current exchange rate. The Prime Minister’s statements were also highlighted by the Governor of Bank of Japan, Haruhiko Kuroda. Abe said he expects the central bank to continue accelerating the loosening of monetary policy to reach the 2% inflation target.
The comments precede a change in the management of the Bank of Japan, with the five-year terms of governor Haruhiko Kuroda and his two deputies ending in April and March respectively.
However, Shinzo Abe did not give any further evidence as to whether Haruhiko Kuroda would still be responsible for this development as a manager of the Bank of Japan. The government is expected to submit its candidatures to Parliament at the earliest by mid or late February. According to sources, Kuroda has a strong chance to be re-appointed.
In front of the parliamentary committee, Kuroda said that the BoJ is not in a hurry to withdraw its massive stimulus program. He acknowledged at the same time that continued quantitative easing further hampers regional banks, which are already suffering from narrowing margins due to an aging population.
“However, it is extremely important to achieve our inflation of 2%”, said Kuroda. “The Japanese inflation remains far from our target, so we must continue patiently with a powerful monetary policy easing”, added he.