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Published Mar 10, 2023 • Last updated 23 hours ago • 2 minute read
The Bank of Japan (BOJ) maintained ultra-low interest rates on Friday and held off making changes to its controversial bond yield control policy, leaving options open ahead of a leadership transition in April.
Though widely expected by most analysts, the decision sent the yen and local bond yields tumbling as some investors unwound bets retiring central bank governor Haruhiko Kuroda would tweak the yield curve control (YCC) at his last policy meeting.
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Following are excerpts from Kuroda’s comments at his post-meeting news conference, which was conducted in Japanese, as translated by Reuters:
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WAGES AND INFLATION
“We’re seeing changes in the views expressed by companies and unions ahead of the shunto wage negotiations. We hope this will lead to a positive change that pulls Japan out from a long-held perception that wages and inflation won’t rise.”
“It may take time but it’s still possible for Japan to stably and sustainably achieve the BOJ’s 2% target.”
“We’re seeing signs of change in Japan’s long-held perception that wages and prices won’t rise much. That’s seen in rising inflation expectations. Japan may be moving closer to what the BOJ had strived to achieve, which is to hit 2% inflation backed by wage growth. But there’s still various uncertainties surrounding the economy. As such, it’s important to maintain massive stimulus for the time being to support corporate efforts to raise wages.”
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SIDE EFFECTS OF MONETARY EASING
“The BOJ has been taking various steps to mitigate the side effects of its monetary easing. I can say that the benefits of our monetary easing have far exceeded the demerits.”
EXIT FROM ULTRA-LOOSE POLICY
“It’s premature to debate an exit from ultra-loose policy. How to combine changes in interest rates and the central bank’s balance sheet, and in what order, would depend on economic and price developments at the time.”
“We expect inflation to slow below our target towards the latter half of fiscal 2023, then pick up again. As such, it’s too early to decide whether the BOJ can exit easy policy at this stage.”
(Reporting by Leika Kihara; Editing by Subhranshu Sahu)
