BoJ chief pleads for time as he starts new term

Kuroda (L) meets Japan's Prime Minister Shinzo Abe at Abe's official residence

Tokyo (AFP) – Bank of Japan Governor Haruhiko Kuroda said Monday it would take time to extricate the world’s third largest economy from its ultra-loose monetary policy as he embarked on a new five-year term.

Prime Minister Shinzo Abe handed Kuroda a second term at the helm of the central bank with a mandate to battle deflation and stoke a nascent recovery.

But the cautious 73-year-old told reporters there was a “deep-rooted” deflationary mindset among companies and households in Japan.

Japan “is steadily heading towards” the two-percent inflation target and the economy has “largely improved”, Kuroda said.

However, “we’re not at the phase of considering the timing for the exit” and how it will be carried out, stressed the central bank chief.

Kuroda took the helm in March 2013 with a licence to deploy what was called a monetary “bazooka” to revive the moribund economy.

He has overseen a policy of ultra-aggressive monetary easing, adopting in January 2016 the BoJ’s first-ever negative interest rates — effectively charging lenders to park their cash at the central bank.

The BoJ has also pledged to keep the yield on 10-year government bonds around zero by buying as many as necessary.

However, Kuroda has failed in his mission to hit the inflation target of two percent — the latest figures showed prices rising by 1.0 percent in February.

He warned that disclosing details of how Japan would exit its ultra-loose monetary policy could cause “chaos” in terms of communication with the market.