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
  • 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

By continuing to browse our site you agree to our use of cookies, revised Privacy Notice and Terms of Service. More information about cookiesClose