BOJ’s Sato:

  • Japan economy likely to resume moderate recovery trend from summer
  • Expected gradual recovery in exports likely to heighten likelihood of economy moving in line with BOJ’s scenario
  • There is risk euro zone may suffer from prolonged period of disinflation mainly in peripheral nations
  • Must be mindful of chance US inflation may stay lower than desirable levels in long-term perspective
  • Japan economy somewhat undershooting, prices overshooting, initial projections
  • QE’s intended transmission channels, such as portfolio rebalancing and rises in inflation expectations, not appearing as much as expected so far
  • Monetary policy must be guided flexibly with eye not just on economy and prices, but on risks including financial imbalances
  • BOJ’s price target by no means a rigid, superficial framework that simply aims to achieve 2% temporarily
  • Must avoid any misunderstanding that the BOJ is solely pursuing pickup in prices without due attention to economy
  • natural for nominal interest rates to face upward pressure when unconventional monetary policy begins to exert intended effects
  • BOJ’s price target is a flexible framework in which some degree of latitude, both upside and downside, is accommodated
  • BOJ policy, including eventual exit from QE , shouldn’t be swayed by consideration to fiscal sustainability

Headlines via Reuters

There is nothing surprising from Sato here, and the yen is reacting accordingly. USD?JPY is down a little on the session, with news earlier once that there is little sign of further BOJ easing on the near-term horizon: Officials less alarmed by sluggish exports, another sign the BOJ feels little pressure to act anytime soon

There will be more from Sato later when he holds a press conference.