BOJ to Keep Tabs on Side Effects of Easing: Kuroda

November 5, 2018

Nagoya--Bank of Japan Governor Haruhiko Kuroda said Monday the central bank will keep close tabs on the side effects of its large-scale monetary easing.

The BOJ "fully recognizes" that maintaining the accommodative policy "could have an impact on financial system stability as well as the functioning of financial intermediation," Kuroda said in a lecture in Nagoya, Aichi Prefecture, central Japan.

While noting the need to maintain the accommodative policy to realize the 2 pct inflation target, Kuroda said "prolonged downward pressure on financial institutions' profits under the continued low interest rate environment could create a risk of a gradual pullback in financial intermediation."

Fears about such a possibility are "not significant" at the moment, but the BOJ make efforts to keep itself updated about the situation and encourage financial institutions to take concrete actions as necessary, he said.

Kuroda also said that the trade friction between the United States and China could have a "more significant" impact on the Japanese economy.

The BOJ will closely watch developments, he said.

In a question-and-answer session after the lecture, Kuroda said that trading in Japanese government bonds had slightly increased since late July, when the central bank decided to tolerate slight rises in long-term interest rates.

The BOJ will "continue to work to minimize side effects" of the easy monetary policy, he said. Jiji Press