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The BOJ likely to offer the first rate surprise

BOJ Governor Kuroda Highlights Fiscal Policy as an Alternative to Boost Economic Growth

Posted Thursday, November 28, 2019 by
Arslan Butt • 1 min read

BOJ Governor Haruhiko Kuroda has confirmed his support for the Japanese government’s plans to unveil a fiscal spending package towards disaster relief in a bid to boost economic growth. While addressing a seminar, Kuroda stressed on the need for the government to step in with “fiscal policy and structural policies” to protect Japan’s economy from weakness in the face of recent natural disasters and heightening external risks.

The BOJ has very little room left for further easing in monetary policy with interest rates already in negative territory. However, fiscal policy offers a more promising way to prevent a recession in the world’s third largest economy.

In a country like Japan that is prone to natural disasters, Kuroda stressed on how climate-related risks are another area of concern for central banks, especially since they are considerably more unpredictable than other conventional risks. The recent typhoon that hit Japan last month resulted in significant damage to assets and compounded risks for financial institutions.

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