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Haruhiko Kuroda: Tightening of the US monetary policy is good for the global economy

Haruhiko Kuroda bank of Japan

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The governor of the Bank of Japan, Haruhiko Kuroda, said the Federal Reserve’s stable interest rate growth was “mostly good” for the global economy. With this, he dispelled concerns that tightening of the US onetary policy could harm Asian economies by triggering capital flight. But Haruhiko Kuroda was more cautious about the risks associated with the escalation of the trade disputes, which he described as “quite unusual” on a scale and as a “new development” for the world economy.

According to Haruhiko Kuroda, an aging population can create structural challenges for central banks as it reduces their growth potential and requires them to use more money to return to growth.

The International Monetary Fund (IMF) Supervisory Board warned earlier today that tighter funding conditions are among the risks that may affect many developing and developed countries.

However, Haruhiko Kuroda commented that higher US interest rates are positive for the global economy because the normalization of Fed policy shows that the US economy is in good shape.

“It is good that the United States normalize monetary policy because the economy is growing and inflation is now close to the Fed target”, said the governor of the Bank of Japan. “Gradual normalization of monetary policy is a clear statement about the intent and future policy of the Fed. It is good for the world economy”, added he.

Haruhiko Kuroda explained that the Central Bank of Japan faces a different challenge than the Fed, because it takes more time to reach its 2% inflation target. He is determined to support a massive stimulus program in Japan an d ultra-light monetary policy.

The aging populations can also create “serious challenges” for many countries because it will require central banks to cut interest rates more than before to promote their economies.