Bank of Japan (BOJ) Kuichi:

  • Japan economy recovering moderately
  • Paying attention to downside risks to growth
  • Says Japan exports are moving sideways due partly to soft emerging economic growth
  • Japan’s economy continues moderate recovery as a trend
  • Overseas economies likely to recover moderately, help improve japan’s export environment
  • See downside risks to Japan’s economic growth outlook
  • I am somewhat more cautious on price outlook than BOJ’s median projection
  • Among overseas developments, I am most focused on downside risks to China’s economy
  • Effect of sales tax hike on household spending likely temporary, though downturn in spending seen quite big
  • Price gains have been strongly influenced by weak yen
  • There is uncertainty on whether upward price pressure from narrowing output gap will exceed downward pressure from fading weak-yen effect
  • QQE has already made considerable achievements with output gap seeming to have closed for first time in almost 6 years
  • Gap between underlying inflation and medium- to long-term inflation expectations seems to have narrowed to a considerable extent
  • Long-term efforts to boost Japan’s growth potential necessary for Japan to hit BOJ’s 2 pct inflation target
  • Have proposed setting 2 pct inflation target as a medium- to long-term target, instead of setting 2-year deadline
  • QQE has big potential risks, such as difficulty normalising monetary policy and chance of stoking speculation of debt monetisation
  • Can’t rule out chance BOJ will be forced to ease more if markets view achievement of 2 pct inflation as difficult, even if costs of doing so exceeds benefits
  • Must be particularly vigilant to potential risks of QQE, such as buildup of financial imbalances, as boj buying assets on unprecedented scale
  • It will be necessary in future to mull option of gradually starting to shift focus of policy away from asset purchases and toward zero rate policy
  • It will probably take considerable time for monetary policy to be normalised with unwinding of unconventional policy

Most of these headlines coming via Reuters

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I gotta say, I’m liking this Kiuchi chap. not often I hear such (relatively) straight talk out of the BOJ. Maybe he feels a little freer to say what he thinks ’cause everyone is watching Sharknado … dunno