October 31, 2017 / 6:46 AM / 24 days ago

HIGHLIGHTS-BOJ Governor Kuroda comments at news conference

Oct 31 (Reuters) - The Bank of Japan kept monetary policy steady and roughly maintained its ambitious price forecasts on Tuesday, pointing to signs of growing strength in the economy that policymakers hope will accelerate inflation towards its elusive 2 percent target.

Following are comments from BOJ Governor Haruhiko Kuroda at his post-meeting news conference:

NO NEED TO CHANGE YIELD TARGETS:

“It’s true the economy is steadily improving. But inflation ... remains distant from our target. I don’t see a need now to change our yield targets.”

“Our main objective is to achieve 2 percent inflation and stably maintain price growth at that level. There’s no change to our view that monetary policy must be guided to achieve this objective.”

HARD TO PREDICT YEN MOVE:

“Abnormal yen rises that deviate from economic fundamentals not just hurt the economy but accelerate deflation.”

“If all things equal, the BOJ’s resolve to maintain its powerful monetary easing could weaken the yen ... But currency markets aren’t that simple. If all things equal, the divergence in monetary policies could weaken the yen against the dollar and the euro. But in the real world, all things aren’t equal so it’s hard to predict how currency rates move.”

EXIT STRATEGY:

“It would be misleading for markets for the BOJ to debate an exit strategy now. Having said that, we’d like to explain as much as possible how our current and future policies could affect the economy and prices.”

“It’s wrong to assume an exit from monetary easing would be difficult just because central banks are embarking on non-conventional monetary policies. Even under conventional monetary policies, central banks can face difficulty exiting if monetary easing or tightening steps are excessive.”

PURCHASE OF ETFs AIMED AT AFFECTING RISK PREMIUM:

“The amount of our ETF purchases vary from time to time ... We don’t have a strict deadline for achieving our loose target of buying them at 6 trillion yen per year. Our purchases aren’t aimed at achieving a specific stock price level. They are instead aimed at affecting risk premium.”

“When adjustments to our framework become necessary, they don’t need to involve everything in the BOJ’s framework. Our (ETF) purchases focus on affecting risk premium, so we will take that into account in making a decision.”

“Our pledge on the pace of ETF buying is different in nature from that for government bond purchases. Our bond purchases are aimed at achieving an appropriate shape of yield curve. As for ETF purchases, our pledge to buy at an annual pace of 6 trillion yen is our policy guidance in itself.”

LITTLE RISK FROM ETF PURCHASES:

“One demerit of the BOJ buying ETF could be that if the central bank owns a significant portion of Japan’s entire stock market, its purchases could disrtort market pricing. But the BOJ currently owns just 3 percent of Japan’s stock market in terms of market capitalisation. As such, I don’t see a big risk emerging from our ETF purchases.”

RISK-TAKING IN STOCK MARKET:

“For now, stock prices seem to reflect corporate profits and Japan’s economic state. I don’t see any excessive risk-taking in the stock market.”

ON THE NEXT BOJ GOVERNOR:

“When I look at central bank governors of advanced economies, I think it’s important that they have the ability to grasp what is happening in the real economy and the ability to theoretically analyse the impact of policy moves. He or she also needs to have a global human network.”

Reporting by Leika Kihara, Stanley White and Tetsushi Kajimoto; Compiled by Biju Dwarakanath

Our Standards:The Thomson Reuters Trust Principles.
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