(Reuters) – The Bank of Japan on Thursday doubled down on its commitment to maintain its massive stimulus programme and a pledge to keep interest rates ultra-low, triggering a fresh sell-off in the yen and sending government bonds rallying.
Reinforcing its resolve to support a fragile economy even as sharp rises in raw material costs push up inflation, the BOJ also said it will offer to buy unlimited amounts of 10-year government bonds to defend an implicit 0.25% cap around its zero target every market day.
The BOJ’s commitment to its zero-rate programme puts it at odds with major economies that are shifting towards tighter monetary policy, although inflation in Japan is expected to creep up towards the central bank’s 2% target.
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:
THE YEN’S DECLINE
“It’s desirable for currencies to move stably in a way that reflects economic fundamentals. The kind of rapid moves seen in a short period of time heightens uncertainty for companies and makes it difficult for them to set business plans.”
“We haven’t changed our view that a weak yen is positive for Japan’s economy as a whole. But it’s also true that excessive currency volatility would heighten uncertainty for companies … and would be unfavourable for the economy.”
PRICE OUTLOOK AND MONETARY POLICY
“When excluding energy and volatile food prices, consumer inflation will likely gradually accelerate and hit 1.5% in fiscal 2024. But that’s still below our 2% target. When including energy, our core consumer inflation forecast is for a 1.1% gain in fiscal 2024. I don’t think we’ll see a stage where we can seek an exit from our easy monetary policy.”
(Reporting by Leika Kihara; editing by Uttaresh.V)
