BOJ's deputy governor Iwata with some comments
- There is a misunderstanding in the market that BOJ will exit easy policy soon
- It's a mistake to think that the BOJ will raise rates soon
- 2% inflation target is still very far
- Current yield curve is appropriate
- No need to raise yield targets currently, sees no change for some time
- Important for BOJ to be ready to change yield targets if conditions change
- BOJ won't raise rates just because of Fed or ECB exiting QE
- Rates will change base on economy, prices
- YCC is policy focusing on narrowing output gap, doesn't have much power to heighten inflation expectations
- All 3 arrows of Abenomics must be reflationary for inflation expectations to heighten
Iwata trying to do his part to signal the market again that the BOJ is not going to move away from its easing policy any time soon. Meanwhile, we're seeing USD/JPY close in on session lows now at 108.74 as the dollar weakens across the board.
The market has been largely ignoring all the recent BOJ comments about continued easing, but I gather it's only a matter of time before they put their foot down. It's very rare that we see such a coordinated effort by Japanese officials to talk down the currency and/or promote further monetary easing, so it's best to be wary if the yen continues to strengthen further.
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