Kuroda affirms BOJ’s unlimited easing power but no ‘Helicopter’

Bank of Japan (BOJ) just rattled the global markets today, as it decided against popular expectations of further easing. Yen has reversed all of its recent decline and more on rumor on negative loans and if the rally extends in New York session, today may mark Yen’s biggest rise against Dollar in last decade.

While speaking at a conference after the policy announcement, BOJ governor Haruhiko Kuroda affirmed that the bank has unlimited easing power and rates may venture into further negative territory but preferred not to fire at today’s meeting. He feels, it would take more time than originally anticipated to reach 2% inflation goal and the easing to sink into real economy. But the bank stands ready to act further. Meanwhile it reduced its growth forecast from 1.5% to 1.2% and inflation excluding food at 0.5% from 0.8% prior.

At once point Yen was up, 3.18% trading at 107.92 per Dollar but retraced some of the gains and currently trading at 108.3 per Dollar. Nikkei is down more than 6.5% and likely to extend loss further today in futures trading in New York hours.

Speaking at the conference, Mr. Kuroda confirmed that Bank of Japan (BOJ) considers helicopter money to be illegal under the constitution, which may have soured the mood further.