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Bank of Japan nominee Kuroda pledges to fight deflation

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Bank of Japan nominee Kuroda pledges to fight deflation
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Haruhiko Kuroda, the man who is set to take over at the Bank of Japan, has been talking tough at his confirmation hearing at the parliament in Tokyo.

Unlike most central bank governor, Kuroda wants to boost inflation to two percent within two years.

That is because for the last 15 years the trend in Japan has been deflation, with the economy shrinking as people hold off buying things, knowing they will be cheaper in the future.

Kuroda said that would be good not only for Asia but also for the global economy.

The nominee suggested the most natural way to ramp up the central bank’s stimulus for the economy would be huge purchases of longer-dated government bonds. The BOJ should also consider kicking off its open-ended asset purchases early, rather than waiting until the scheduled start date of 2014.

“It would be natural for the BOJ to buy longer-dated government bonds in huge amounts,” Kuroda said during the confirmation hearing in the lower house of parliament. “But the central bank also needs to scrutinise market developments at the time, as well as the potential drawbacks.”