BOJ vows to do ‘whatever it takes’ to end deflation

TOKYO • Marking a clear changing of the guard at the Bank of Japan, its new governor on Thursday stressed his commitment to do “whatever it takes” to defeat deflation by buying a larger and wider range of assets, measures his predecessor was seen as slow to take up.

In his inaugural news conference a day after he assumed the BOJ’s top post, Haruhiko Kuroda expressed for the first time as governor his desire to hit the bank’s 2% inflation target in two years, a goal that many economists find too ambitious, but which has already helped weaken the yen and propel Tokyo shares to multiyear levels.

“There is no doubt that we need to carry out bold monetary easing both in terms of quantity and quality,” the 68year-old Mr. Kuroda said, adding that “quantitative easing is indispensable.”

Prime Minister Shinzo Abe, who picked Mr. Kuroda, has been urging for a “regime change” at the central bank, and in addition to boosting asset purchases and their maturities, investors expect Mr. Kuroda to try to bring the quantity of money in Japan’s banking system to specific levels. The BOJ’s present policy has no such target, although it has bought assets worth tens of trillions of yen, saying this will help lower interest rates.

Mr. Kuroda was non-commit- tal on whether he would hold an emergency meeting of the bank’s policy board before its next regular gathering scheduled for April 3-4, an option that some market participants speculate he may take. He also offered few details on the specific easing measures the ninemember board may adopt.

But he did suggest he wants the BOJ to buy more real estate investment funds. He also said the BOJ should purchase longer-term financial assets to flatten the yield curve, dismissing the view that such purchases could backfire by igniting asset bubbles.

“We are not planning to target asset prices, and there are no concerns now over potential bubbles,” he said.

Toshihiro Nagahama, chief economist at Dai-Ichi Life Research Institute, said he expected the bank to take fresh easing steps at its next meeting.

“It was clear the new leadership is willing to do whatever it takes to push forward with easing—they seemed eager to work on the markets,” Mr. Nagahama said.

The two new deputy governors also reiterated their commitment to beating 15 years of deflation. Kikuo Iwata, an academic known as a harsh critic of past BOJ policies, reiterated that he was willing to resign if the 2% goal isn’t reached in two years.

Even the other deputy, Hiroshi Nakaso, a career BOJ official, admitted that the bank had failed to “deliver results,” adding that it could have done more to beat deflation.