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Big asset buying alone can't hit 2% inflation - Kuroda
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Idea of negative rate was endorsed by many in BOJ board
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Kuroda leaves mixed legacy as his 10-year helm ends in
April
(Adds size of BOJ money injection in lead, final paragraph)
By Leika Kihara
TOKYO, March 15 (Reuters) - Bank of Japan (BOJ) Governor
Haruhiko Kuroda, who retires in April, said his decade-long
monetary experiment that injected $3.7 trillion into the economy
to shock the public out of a deflationary mindset was "half
successful."
Hand-picked by deceased former Prime Minister Shinzo Abe in
2013, Kuroda jolted the conservative central bank and markets by
deploying a "bazooka" asset-buying programme to show his resolve
toward achieving the 2% inflation target in roughly two years.
Aside from pushing down borrowing costs, Kuroda's bazooka
sought to influence public perceptions and shake the public out
of deflation with a huge blow of monetary stimulus.
"It was meaningful and has had some effect," Kuroda told
parliament on Wednesday, when asked by a lawmaker whether he
thought the measure successfully influenced public perceptions.
"But that alone isn't sufficient to achieve our 2% inflation
target. In that sense, the policy was half successful," he said.
The comments come at a time central banks across the world
wrestle with the challenge of effectively communicating their
policy intention to the public.
Kuroda, whose second, five-year term ends in April, leaves
the BOJ with a mixed legacy: his massive stimulus is praised for
pulling the economy out of deflation, but it strained bank
profits and distorted market functions with prolonged low rates.
Critics also blame Kuroda for wrong-footing markets in 2016
by abruptly introducing negative interest rates. The decision,
which jolted markets and proved hugely unpopular among the
public, was made by a 5-4 vote.
Kuroda said he had discussed the negative rate idea with BOJ
board members prior to the policy meeting.
"Many of them appeared to think it was appropriate. But some
thought it was premature, and wanted to spend more time looking
at the situation," Kuroda said, defending the move as having won
approval by most of his fellow board members.
Kuroda's bazooka was initially praised for boosting stocks,
brightening corporate sentiment and reversing a debilitating yen
spike that had hurt the export-reliant economy.
But as the positive effect began to fade and its huge bond
buying faced limits, the BOJ switched to a policy targeting
interest rates starting with the January 2016 decision to adopt
negative rates.
Eight months later, it added a cap on long-term rates in a
policy called yield curve control (YCC) that is still in place.
Many analysts expect the BOJ to continue dismantling
Kuroda's radical stimulus policy under his successor Kazuo Ueda.
The BOJ has seen its balance sheet expanded by roughly
497 trillion yen ($3.7 trillion) since Kuroda deployed the
bazooka stimulus, and now owns half the Japanese government
bonds (JGB) market, according to central bank data.
($1 = 134.6000 yen) (Reporting by Leika Kihara; Editing by Jacqueline Wong and Raju Gopalakrishnan)
Messaging: leika.kihara.reuters.com@reuters.net))