Central Banks

BOJ Kuroda signals readiness to top up ETF purchases

BOJ may top up ETF purchases
BOJ may top up ETF purchases

Bank of Japan Governor Haruhiko Kuroda said on Wednesday the central bank's presence in the exchange-traded fund (ETF) market is "not too big," signaling that topping up purchases of ETFs could be a real, near-term option.

The BOJ buys ETFs, as well as government bonds and trust funds investing in property, as part of its massive stimulus program. It held about 7.8 trillion yen ($71.6 billion) of ETFs as of September 2015, roughly half the size of Japan's market.

"I don't think the BOJ's presence in the (ETF) market is too big," Kuroda said, adding that new ETFs can be cobbled together "as much as possible" with listed stocks in the Tokyo Stock Exchange's 500-trillion-yen market.

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"There continues to be plenty of reason to affect risk premium of asset prices," Kuroda told parliament, suggesting that topping up ETF purchases could be a strong future policy option.

BOJ officials are growing more receptive to stepping up monetary easing measures by buying more ETFs invested in shares, as a stock market tumble and weak global growth threaten the country's fragile economic recovery, sources have told Reuters.

BOJ policymakers will likely debate the possibility of easing monetary policy further at a rate review next week, as a raft of gloomy data threatens their scenario that a moderate economic recovery will accelerate inflation towards a 2 percent target, sources have told Reuters.