BOJ Has Various Tools to End QQE

Bareksa.com - The Bank of Japan has a variety of tools and ways to exit from its massive monetary stimulus, although it is premature to discuss when it will end its ultra-loose policy, a senior central bank official said in an article released on Friday.

Not reinvesting proceeds from the BOJ's holdings of Japanese government bonds when they reach redemption, or raising interest rates on excess reserves parked with the central bank, could be among options, Kazuo Momma, executive director of the BOJ, said in the article contributed to a Spanish academic paper on June 13.

It is the first time a senior BOJ official publicly laid out specific options for ending the bank's stimulus programme.

The BOJ embarked on an intense burst of monetary stimulus, called "quantitative and qualitative easing" (QQE), in April last year, under which it pledged to double base money via aggressive asset purchases in order to accelerate inflation to 2 percent in roughly two years.

With consumer inflation only having exceeded 1 percent, BOJ officials have remained silent on how they may exit from the massive stimulus programme.

"It is premature to discuss when and how the BOJ should exit from the QQE, but one thing for sure is that it has a variety of tools and there are many ways to exit," Momma said in the article, the text of which was released on the BOJ's website on Friday.

"The actual combination and sequencing of these tools will surely depend on developments in the economy, prices, and financial markets at the time of the exit," he said

(Source : Reuters)