The Bank of Japan didn’t cut interest rates Tuesday, but it will and it could if it has to go all the way down to negative 0.5%, Governor Haruhiko Kuroda told parliament Wednesday.
In a press conference, Kuroda said the BOJ was ready to move on any of three fronts: reducing the current rate of negative 0.1%, accelerating and boosting the monetary base or expanding the purchase of riskier assets.
In response to a lawmaker’s question about the theoretical possibility of lowering the rate to negative 0.5%, Kuroda said the bank has a lot of room to cut the rate further and could potentially go that low, reported Bloomberg.
After a series of government steps to get the economy moving, economic growth is slowing and the BOJ’s goal of 2% inflation seems far in the distance. Most analysts expect the authorities to provide more stimulus to get the economy moving. But investors are questioning whether monetary policy is reaching its limits.
Economists surveyed by Bloomberg have judged that a further cut to the negative-rate policy is the most likely tool. Kuroda said Tuesday that he doesn’t need to wait to see the full impact of the negative rate before acting again, if change is needed.