BOJ’s Kuroda says market rout not caused by negative rates

(Reuters) – Bank of Japan Governor Haruhiko Kuroda blamed investors’ "excessive" risk aversion for pushing down global stock prices, shrugging off criticism that his decision to adopt negative interest rates was partly behind the recent market rout.

Japan’s Nikkei average fell 3.3 percent to a fresh 15-month low while the yen soared to a 15-month high as investors flocked to the safety of the Japanese currency on concern about the health of European banks and the global economic outlook.

The market volatility more than wiped out the positive market impact Kuroda had hoped to deliver with his decision last month to adopt a negative interest rate policy.

Kuroda said negative rates will help stimulate the economy down the road by lowering borrowing costs, dismissing criticism that the policy move has aggravated the market turmoil by stocking fears it will further squeeze bank profits.

"I don’t think the BOJ’s negative rate policy is behind (the recent market turbulence)," Kuroda told parliament on Friday.

"Excessive risk aversion is spreading among global investors," he said, adding that he will carefully watch how recent market moves could affect Japan’s economy and prices.

He also reiterated that the BOJ will not hesitate to expand monetary stimulus further if needed to achieve its 2 percent inflation target.

"Since adopting quantitative and qualitative easing, I have consistently said the BOJ will take whatever steps necessary, including additional monetary easing, if needed to hit our price target," Kuroda said. (TOKYO, Feb 12/2016)

The BOJ cut the benchmark interest rate to below zero last month, stunning investors with another bold move to stimulate the economy as volatile markets and slowing global growth threaten its efforts to overcome deflation.

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