Dec 20 The Bank of Japan kept monetary policy
steady and took a more upbeat view of the economy on Tuesday,
reinforcing market expectations that its future policy direction
could be an increase - not a cut - in interest
Following are comments from BOJ Governor Haruhiko Kuroda at
his post-meeting news conference:
IMPACT OF YEN FALLS ON INFLATION
"In general, a weak yen directly pushes up prices through a
rise in import costs. In the long run, it also affects prices
indirectly through (a narrowing of the) output gap and inflation
We will reflect these market developments and their impact
on the economy and price outlook at our next policy meeting.
They will be taken into account in our semi-annual outlook
report in January."
PROSPECTS FOR SLOWING PURCHASES OF EXCHANGE-TRADED FUNDS
"The BOJ's ETF buying is part of its QQE framework and helps
to push down risk premium. It's not aimed at manipulating stock
prices to a particular level. Our ETF buying is a necessary step
to achieve 2 percent inflation ... As for the outlook, we will
take an appropriate action by looking at economic, price and
"We would look at moves in stock markets, overall moves in
financial markets, and moves in the economy and inflation at
that point in time. We would consider such things under the
overall framework of QQE with yield curve control.
"It's true we have upgraded our assessment of Japan's
economy by a notch, and such things may be reflected in stock
prices, but at this point it is not appropriate to slow our
purchases of ETFs."
ON TALK BOJ MAY RAISE 10-YEAR BOND YIELD TARGET
"We are still distant from our 2 percent inflation target.
It's therefore appropriate to continue with powerful monetary
"It's absolutely not the case that Japanese government bond
yields are allowed to rise in tandem with overseas long-term
interest rates, or that (any such rise in Japanese yields) would
prompt us to raise our yield targets."
ON RAISING YIELD TARGET TO STAVE OFF SHARP YEN FALLS
"Monetary policy doesn't target currency rates ... Having
said that, current exchange-rate moves can be described more as
dollar strengthening rather than yen weakening. Almost every
country's currency is weakening against the dollar"
"It's possible the divergence in monetary policy directions
could affect currency moves. But for now, I don't see current
yen falls as excessive or posing any problem. Current (yen)
levels are around the same levels seen in February. They aren't
too surprising a level."
"It's not a cap and only a policy target to guide (the
10-year bond yield) around zero percent ... We don't have any
(preset) idea that yields should not rise above a certain level
or fall below a certain level.
"It's not as if 10-year JGB yields must be fixed rigidly at
zero percent. It's also not the case that the yields must not
exceed 0.1 percent or that they are allowed to do so. I think
such debate isn't substantial."
FISCAL DISCIPLINE, BOND-BUYING
"Fiscal discipline is very important. This is not something
the central bank controls but something the parliament and
government decide, take responsibility, and hold power over. It
is the foundation of democracy."
"We slightly increased the amount of super-long JGBs we
purchase but this was done in accordance with the policy,
decided at the BOJ policy meetings, to achieve an appropriate
yield curve ... In order to achieve an appropriate yield curve,
we will conduct this operation as needed in accordance with
policies decided by the (BOJ's) policy board meetings\
ON EXITING FROM ULTRA-LOOSE POLICY
"How we actually execute an exit depends on inflation and
financial situations at that time. It is not appropriate to
discuss in detail now exit plans as this may confuse markets. We
will debate (exit plans) at an appropriate time.
"My term will be up in April 2018. I cannot say now whether
or not we will discus exit plans beforehand. There's a
possibility we will debate it, and there's a possibility we will
(Reporting by Leika Kihara, Stanley White, Tetsushi Kajimoto
and Minami Funakoshi; Editing by Shri Navaratnam)