TOKYO: Bank of Japan (BoJ) deputy governor Kikuo Iwata said on Tuesday the central bank was conducting a study of how it could end its massive monetary stimulus in the future, but acknowledged it was still far from achieving its inflation target.
Iwata, speaking in parliament, said the BoJ did not want to publicise the exit-strategy simulation because doing so would cause market confusion, given that its 2% price goal remains distant.
"The BoJ is carrying out a simulation based on several assumptions of an exit strategy," Iwata told a financial committee in Japan's upper house.
Market showed little reaction to Iwata's remarks.
Last week, BoJ deputy governor Hiroshi Nakaso said the central bank has been internally debating what tools it can use when it eventually ends its unconventional monetary stimulus programme.
When the BoJ introduced its quantitative easing policy in 2013, its holdings of Japanese government bonds rose at an annual pace of 80 trillion yen.
Since then, the BoJ has loosened its commitment to this target and focused on controlling short and long-term yields instead.
There are major concerns among some economists about the difficulties the BoJ may face in reducing its extremely large holdings of government debt and about how it will manage money market operations to control liquidity.
The challenges associated with unwinding the massive monetary policy stimulus global central banks have unleashed in recent years have drawn renewed attention. - Reuters
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