Bank of Japan Governor Haruhiko Kuroda said the central bank has no plans to tweak its purchases of exchange-traded funds (ETF) or unload its holdings, fending off criticism its massive buying was draining liquidity and distorting market pricing.

The BOJ’s ETF buying is part of its ultra-loose monetary policy programme that must be maintained to cushion the economic blow from the coronavirus pandemic, Kuroda said on Thursday.

“Our ETF buying isn’t directly aimed at pushing up stock prices,” Kuroda told parliament, shrugging off critics who say the BOJ was manipulating stock moves with the purchases.

“Our monetary easing steps, including our purchases of ETF, are necessary measures. At present, we have no plan to review our ETF-buying programme or consider unloading our holdings.”

The BOJ buys huge amounts of government bonds and risky assets, including ETFs, to flood markets with cash and prevent adverse market moves from hurting business sentiment.

As part of efforts to ease the COVID-19 blow, the BOJ pledged in March to buy up to 12 trillion yen ($115.07 billion) worth of ETFs per year – double the pace it had promised to buy annually.
($1 = 104.2800 yen) 

Reuters