Japan's central bank vows to examine plans to exit from aggressive monetary easing

Bank of Japan Governor Haruhiko Kuroda on Wednesday vowed to start thinking about plans for the central bank to exit from its aggressive monetary easing measures.

During a parliamentary session, the BOJ chief said it is very important to explain clearly how the central bank will attempt to taper its large-scale monetary easing that has been implemented during Kuroda's tenure.

Along with sizable asset purchases under Kuroda's stewardship since he assumed the post in 2013, the BOJ has eased its monetary policy to levels not seen before in Japan and in January last year, the bank opened to plunge its interest rate for the first time into negative territory.

In September 2016, the central bank adopted a "yield-curve control" policy which functions to keep long-term interest rates exceedingly low by adjusting the amount of its bond purchases.

The BOJ to date has acquired in excess of 40 percent of the Japanese government's outstanding bonds.

The policy has come under scrutiny and criticism recently for its durability and sustainability, however, as yield and debt prices move inversely to each other.

Kuroda has said the bank will not necessarily peg 10-year yields at exactly zero percent, but rather is aiming to guide yields around zero percent, with some room for allowances.

In a recent analysis of the situation the BOJ chief said the yield curve control is functioning smoothly and that he expects it to do so in the future.

But such aggressive monetary easing measures functioning simultaneously have led some economist to believe that they might be disruptive to the normal functioning of Japan's economy and its financial system, and hence it might be time to consider tapering them.

The BOJ has been charged with the lofty goal, however, of reversing decades of deflation in Japan and hitting a 2 percent inflation target, the target date of which has been delayed due to sluggish domestic demand and what Kuroda has described as "lateral price moves" and the Japanese public's "deflationary mindset."

With economists calling for an exit strategy from the BOJ's aggressive easing measures, Kuroda has said that while some market participants believe core consumer inflation will approach 1 percent in the latter half of this year, the central bank will not automatically raise its yield target just because of this. Endit