(Adds Kuroda's quotes, detail on yield control policy)
By Leika Kihara
TOKYO, March 17 (Reuters) - Bank of Japan (BOJ) Governor
Haruhiko Kuroda said on Friday there was room to cut interest
rates further into negative territory, but could not comment on
by how much.
Under yield curve control, the BOJ applies a -0.1%
interest rate on a small pool of reserves parked by financial
institutions. It also guides the 10-year bond yield around 0% as
part of efforts to sustainably meet its 2% inflation target.
While it was possible to push short-term rates deeper into
negative territory, cutting it to -2% or -3% would cause "huge
disruption" to the banking system and was therefore difficult,
Kuroda told parliament.
"It'd be hard to push short- and long-term interest rates
down just by deepening (short-term) negative rates," Kuroda
said, stressing the importance to keep buying government bonds.
Kuroda will retire when his second, five-year term ends in
April.
(Reporting by Leika Kihara; Editing by Muralikumar
Anantharaman)
Messaging: leika.kihara.reuters.com@reuters.net))
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