BOJ Kuroda Says Low Oil Price Could Prevent Japan from Reaching 2% Inflation

Bank of Japan Governor Haruhiko Kuroda acknowledged that recent data has painted a patchy picture of the economic recovery but stressed that conditions were falling into place for inflation to head toward his ambitious 2 percent target.

He said the timing for hitting the target may be swayed by oil price moves, suggesting the BOJ won’t expand stimulus if any delay in achieving the goal is due primarily to slumping oil costs.

“It’s unavoidable for our inflation forecasts to fluctuate depending on oil price developments,” Kuroda told parliament on Friday.

With a policy-setting meeting looming next week, Kuroda offered few clues on whether and when the BOJ might next ease monetary policy.

But he ruled out one step considered by markets as a possible policy option, which is to cut a 0.1 percent floor the central bank sets on money market rates.

“We’re not considering cutting or abandoning” the 0.1 percent interest the BOJ pays on excess reserves financial institutions park with the central bank, he said.

via CNBC

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza