BOJ’s Kuroda Says Stock Market Boom Reflects Economic Optimism, Defends ETF Regime



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FILE PHOTO: Bank of Japan (BOJ) Governor Haruhiko Kuroda attends a press conference at BOJ headquarters in Tokyo, Japan June 20, 2019. REUTERS / Kim Kyung-Hoon

TOKYO (Reuters) – Bank of Japan Governor Haruhiko Kuroda said on Tuesday that the recent rally in stock prices reflected market optimism about the global economic outlook, dismissing views that its ultra-loose monetary policy was fueling an asset price bubble.

Kuroda said the central bank would be vigilant about the financial risks associated with prolonged easing, signaling growing concern among some lawmakers that prolonged easing was sowing the seeds of a bubble.

But he stressed that it was premature to debate an exit from ultra-loose politics, including the huge purchases and holdings of BOJ’s exchange-traded funds (ETFs), as the coronavirus pandemic continues to grow. ravage the economy.

“It will probably take a long time to reach our price target (inflation). As such, now is not the time to think about an exit including our ETF purchases, ”Kuroda told parliament.

The BOJ unveiled a plan to revise its policy tools, including its ETF purchase program, in March to make it more sustainable as the pandemic forces it to maintain its stimulus for an extended period.

The plan reflects a growing concern among policymakers about the rising cost of the extended easing. Some analysts also blame the BOJ for continuing its massive ETF purchases at a time when Tokyo stock prices have hit new highs.

Kuroda said it was difficult to predict if the stock markets were in a bubble.

“Optimism about the global economic outlook and the steady rollout of vaccines could be behind the recent surge in stock prices,” Kuroda said.

“But the global outlook remains very uncertain,” he said, adding that the risks to the Japanese economy remained skewed downward.

Reporting by Leika Kihara; Edited by Kim Coghill

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