Japan may be able to get out of its ultra-loose monetary policy, but on the condition that it be focused on the pace of rising short-term interest rates and adjustments in the central bank's large balance sheet.
Bank of Japan (BOJ) Governor Haruhiko Kuroda said so in his speech to parliament on Thursday.
He, however, ruled out the possibility of a short-term interest rate hike, stressing that the BOJ should continue to support the fragile economic recovery with a loose monetary policy.
However, if there is an increase in inflation and wages, Kuroda suggested that the central bank could debate a strategy for tightening and move towards policy normalization.
Although Kuroda continues to emphasize the need to maintain a loose policy, comments on the possibility of abandoning that approach have been heard more frequently of late.
This may indicate that the central bank may sooner or later change its stance.
Meanwhile, Kuroda also told parliament that he does not intend to be reappointed for another term to head the central bank, after his current term ends in April 2023.
