Dec 18 (Reuters) – The Bank of Japan on Friday unveiled a plan to probe more effective ways to achieve its 2% inflation target, following in the footsteps of its U.S. and European counterparts as a renewed spike in infections threatened to derail a fragile recovery.
Following are excerpts from BOJ Governor Haruhiko Kuroda’s comments at his post-meeting news conference, which was conducted in Japanese, as translated by Reuters:
ON BOJ’S PLANNED EXAMINATION OF ITS MONETARY EASING “We will examine operations under yield curve control and our asset purchases. We’ve been reviewing these occasionally. If we find room to take additional measures to make our monetary easing more effective and sustainable, we’ll put them in place.”
“Obviously, there will be no change to our commitment to achieve our 2% inflation target and our pledge to maintain ultra-loose policy until inflation stably exceeds 2%.”
“We will also not tweak our negative rate policy.”
“We’ll use the knowledge we have obtained so far, add analyses and won’t rule out options to make our framework more effective and sustainable. It has nothing to do with an exit from easy policy. We won’t be weakening our monetary easing. Rather, we’re examining ways to make our monetary easing more effective.”
“With the pandemic, there’s a risk the achievement of our 2% inflation target will be delayed. As our monetary easing lasts for a long time, there are concerns in the market about the side effects of our policy. YCC is a framework that can address such concerns but we will look into what we can do further.”
ASKED WHETHER THE REVIEW WILL BE MORE ABOUT FINE-TUNING OF MARKET OPERATIONS, RATHER THAN SOMETHING CLOSE TO THE POLICY REVIEWS OF THE FED, ECB “Information on the policy reviews of the Fed and ECB would be something we’ll take into consideration. But yes, that is my understanding.”
ASKED WHETHER THE EXAMINATION OF BOJ’S MONETARY EASING COULD LEAD TO POLICY THAT TARGETS THE SHORTER END OF THE YIELD CURVE, RATHER THAN 10-YEAR YIELDS “We’ve been saying excessive declines in super-long yields could hurt insurers and pension funds and so are undesirable. We’ve also said the yield curve needs to be stable given the strain the pandemic is inflicting on the economy. We’ll take these points into account in our discussions. But we don’t have any plans now (to tweak the yield target).”
ON RECENT YEN RISES “I don’t have strong concerns over recent market moves, or feel that this will have a grave impact on the economy. But currency rates move on various factors, so we need to carefully watch their impact on the economy and prices.”
ON WHETHER THE BOJ’S POLICY EXAMINATION COULD LEAD TO CHANGES IN ITS ETF PURCHASES “It’s true that this is an extraordinary policy among central banks. It’s therefore necessary to examine ways to make this step effective and sustainable.”
“I don’t think our ETF buying programme faces the risk of being unsustainable in the near term… Having said that, we will introduce any steps that could make our policy more effective and sustainable by looking at current conditions and analysing them.” (Reporting by Leika Kihara; Editing by Subhranshu Sahu)
EXCERPTS-BOJ Governor Kuroda’s comments at news conference
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Dec 18 (Reuters) – The Bank of Japan on Friday unveiled a plan to probe more effective ways to achieve its 2% inflation target, following in the footsteps of its U.S. and European counterparts as a renewed spike in infections threatened to derail a fragile recovery.
Following are excerpts from BOJ Governor Haruhiko Kuroda’s comments at his post-meeting news conference, which was conducted in Japanese, as translated by Reuters:
ON BOJ’S PLANNED EXAMINATION OF ITS MONETARY EASING “We will examine operations under yield curve control and our asset purchases. We’ve been reviewing these occasionally. If we find room to take additional measures to make our monetary easing more effective and sustainable, we’ll put them in place.”
“Obviously, there will be no change to our commitment to achieve our 2% inflation target and our pledge to maintain ultra-loose policy until inflation stably exceeds 2%.”
“We will also not tweak our negative rate policy.”
“We’ll use the knowledge we have obtained so far, add analyses and won’t rule out options to make our framework more effective and sustainable. It has nothing to do with an exit from easy policy. We won’t be weakening our monetary easing. Rather, we’re examining ways to make our monetary easing more effective.”
“With the pandemic, there’s a risk the achievement of our 2% inflation target will be delayed. As our monetary easing lasts for a long time, there are concerns in the market about the side effects of our policy. YCC is a framework that can address such concerns but we will look into what we can do further.”
ASKED WHETHER THE REVIEW WILL BE MORE ABOUT FINE-TUNING OF MARKET OPERATIONS, RATHER THAN SOMETHING CLOSE TO THE POLICY REVIEWS OF THE FED, ECB “Information on the policy reviews of the Fed and ECB would be something we’ll take into consideration. But yes, that is my understanding.”
ASKED WHETHER THE EXAMINATION OF BOJ’S MONETARY EASING COULD LEAD TO POLICY THAT TARGETS THE SHORTER END OF THE YIELD CURVE, RATHER THAN 10-YEAR YIELDS “We’ve been saying excessive declines in super-long yields could hurt insurers and pension funds and so are undesirable. We’ve also said the yield curve needs to be stable given the strain the pandemic is inflicting on the economy. We’ll take these points into account in our discussions. But we don’t have any plans now (to tweak the yield target).”
ON RECENT YEN RISES “I don’t have strong concerns over recent market moves, or feel that this will have a grave impact on the economy. But currency rates move on various factors, so we need to carefully watch their impact on the economy and prices.”
ON WHETHER THE BOJ’S POLICY EXAMINATION COULD LEAD TO CHANGES IN ITS ETF PURCHASES “It’s true that this is an extraordinary policy among central banks. It’s therefore necessary to examine ways to make this step effective and sustainable.”
“I don’t think our ETF buying programme faces the risk of being unsustainable in the near term… Having said that, we will introduce any steps that could make our policy more effective and sustainable by looking at current conditions and analysing them.” (Reporting by Leika Kihara; Editing by Subhranshu Sahu)
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