Here he is! BOJ's Kuroda: No reason to reduce monetary accommodation

Author: Eamonn Sheridan | Category: Central Banks

Bank of Japan Governor Kuroda:

  • BOJ won't signal policy stance via daily market operation
  • BOJ reviewed its policy framework several times but no change to our stance of aiming to hit 2 pct inflation at earliest date possible
  • Negative interest rate policy significantly lowered nominal rates
  • Now is time to make most of favourable global economic conditions, maintain current yield curve
  • Corporate bond and CP rates fell, lending attitude became more positive after negative rates
  • Economic, price conditions improving but still some distance to 2 pct inflation
  • It became necessary to take account of impact of negative rates on banks
  • Economic momentum to hit 2 pct inflation maintained but lacks strength
  • Risks tilted toward downside for Japan's economy, prices
  • Must be particularly mindful of developments in medium-, long-term inflation expectations
  • Flattening of yield curve can squeeze banks' profits
  • See no reason to reduce monetary easing now
  • BOJ won't raise yield target in response to rises in overseas long-term rate rises
  • No reason to raise BOJ's yield target now from standpoint of financial intermediation
  • In japan it is essential for public to experience inflation above 2 pct for some time
  • Super-long JGB yields have risen, creating somewhat favourable environment for life insurers, pensions
  • Don't think BOJ will face difficulties in buying JGBs in future
  • BOJ will continue to examine financial intermediation, closely communicate with financial institutions
  • Even if JGBs become scarce, BOJ can impact rates with smaller JGB purchases
  • Upward pressure on consumer inflation from rise in energy costs is temporary, will dissipate in fiscal 2018
  • Some argue BOJ will eventually lose control over long-term yields, but this will not happen
  • BOJ isn't relying on energy price rises in hitting price target
  • It is essential for underlying trend inflation to heighten for Japan to hit BOJ's price target
  • BOJ is aiming for gradual acceleration of inflation accompanied by rising corporate profits, wages
  • A pick-up in Japan exports and production is becoming evident
  • Japan consumption is picking up and if this continues, companies will be more active in raising prices
  • Consumer sentiment is improving partly due to recovery in stock prices
  • Japan's economy is more firmly making steps toward recovery
More:
  • If Japan inflation accelerates sharply in the future, BOJ may consider adjusting its yield target
  • Don't think BOJ will be forced to raise its yield target just because overseas bond yields are rising
  • Forex doesn't necessarily move in parallel with US-Japan interest rate differentials
  • Don't think the BOJ needs to raise yield target now
  • Don't know if inflation will hit 2% during my current term that ends in April next year
Mr. K musta eaten something stimulating at lunch, he's still going:
  • Relationship between forex, monetary policy is complicated
  • Each country's central bank does not target FX in guiding monetary policy
  • Desirable for forex moves to reflect economic fundamentals
  • It's true US economic fundamentals are better than those of Japan, but that doesn't automatically mean dollar would strengthen vs yen
  • Must look at underlying inflation trend in making monetary policy decisions
  • G20 Communique does not shift to protectionism from support of free trade
  • If necessary we can raise or lower short-term and long-term rate target in future if needed
  • See no need to change now either -0.1 pct short-term rate target, 10-yr jgb target of around zero pct
  • Our ETF purchases aren't intended to fix stock prices at a certain level
Headlines (I don't think I've ever seen so many!) via Reuters

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