Former Bank of Japan (BoJ) Governor Haruhiko Kuroda stated in an interview with the Asahi newspaper that the central bank should persist with its monetary policy normalization and not pause the process. Kuroda suggested that, under normal circumstances, the BoJ would raise its policy rate in April and indicated that external factors such as a US-Iran war would only accelerate interest rate hikes rather than delay them. He expressed confidence in the BoJ raising interest rates three to four times to reach 'around 1.50%' by 2027 [1].
Kuroda's comments come in the context of the BoJ's recent shift away from its ultra-loose monetary policy, which began in 2013 and included measures such as Quantitative and Qualitative Easing (QQE), negative interest rates, and yield curve control. In March 2024, the BoJ lifted interest rates, marking a retreat from its previous stance [1].
Despite Kuroda's forward-looking statements and advocacy for continued normalization, there was no significant market reaction to his remarks. As of the time of reporting, the Japanese Yen (JPY) remained largely unaffected, with USD/JPY trading marginally higher near 160.00 [1].
The BoJ's policy decisions have historically influenced the Yen, with previous stimulus measures leading to depreciation against other currencies. The recent move to unwind ultra-loose policy was driven by factors such as a weaker Yen, rising global energy prices, and inflation exceeding the BoJ's 2% target, alongside prospects for rising salaries in Japan [1].
CONCLUSION
Former BoJ Governor Kuroda's call for continued policy normalization and multiple rate hikes did not trigger a notable market reaction, as the Japanese Yen remained stable. His remarks reinforce expectations for further tightening, but immediate market impact appears limited. Investors may monitor future BoJ actions for more pronounced effects.