Published at 03:16 (GMT) 05 Mar
BoJ dissenter Takahide Kiuchi says appropriate level for inflation of Japan is now lower than BoJ's current 2% target. If BoJ strengthens monetary policy easing execessively to push up prices in short period of the time, it will threaten economic, price stability.
Should make timeframe for 2% inflation target a flexible one. If liquidity in JGB market thins too much, that will heightned volatility and destabilise markets. Must be more miindful now of risk BoJ's huge asset buying will impair mechanism for maintaining fiscal displine.
At some point, BoJ must examine gradually starting to shift focus on monetary policy away from asset purchases to other policy tools. Technically possible for BoJ to keep buying JGBs for time being, but must be mindful of whether current pace of buying is sustanable.
On FX, some focus on the above comments from BoJ dissenter Kicuhi, cautioning BoJ on too much easing. Little impact on USD/JPY for now. USD/JPY at 119.77-79, tight 25-30 pips range of 119.64 to 119.84. Offer at 120.00-10, bids at 119.50-60 for now. More bids at 119.30-40.
EUR/JPY under pressure at 132.65-70, as EUR, EUR/Crosses weighed ahead of ECB details on QE. EUR/JPY hit 1-month lows around 132.41 in NY, lowest level since Feb 2 131.95. As EUR hit 11-half year lows of 1.1062, with talks hedge funds sold good amount of EUR yesterdfay. EUR/JPY bids 132.30-40, offers at 133.20-50.
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