BOJ Kuroda says no ceiling set on its balance sheet expansion

[TOKYO] Bank of Japan Governor Haruhiko Kuroda said on Thursday there was no ceiling on how much the central bank would expand its balance sheet relative to the size of the country's gross domestic product (GDP). "We don't have any particular ceiling," Mr Kuroda said, when asked if there was a limit on expanding its assets.

Mr Kuroda also said a median forecast of the BOJ's nine board members produced in January, which is for core consumer inflation to hit 2.2 per cent in fiscal 2016, showed that members of the board expect inflation to hit the central bank's 2 per cent target by the end of that year in March 2017.

When the BOJ adopted its stimulus programme in April 2015, it pledged to hit 2 per cent inflation in roughly two years by doubling base money through aggressive asset purchases. "There isn't a time frame set in stone when we say roughly two years," Mr Kuroda told parliament, when asked by a lawmaker which specific years the BOJ had in mind in setting the two-year time frame.

Core consumer inflation has slowed due largely to weak domestic demand and slumping oil prices. It stood at 0.5 per cent in the year to December, well below the BOJ's target nearly two years into the adoption of quantitative easing.

But Mr Kuroda countered criticism made by some analysts and opposition lawmakers that his stimulus had proved ineffective. "There has been no discussions in the board that our stimulus was ineffective, could be ineffective or that the programme should be altered," he said.

He also said it was too early to debate an exit strategy for the stimulus programme as Japan was still halfway in meeting its price target.

The BOJ's balance sheet has expanded to 277 trillion yen (S$3.16 trillion) as of Wednesday, nearly two-thirds the size of Japan's GDP, due to its aggressive asset purchases.

REUTERS