BoJ Governor Ueda: Will continue massive bond buying even under new operation decided last week

Bank of Japan (BoJ) Governor Kazuo Ueda addressing a press conference in Nagoya reiterated to patiently maintain monetary easing to support economic activity.

Key Quotes:

• Japan's economy recovering moderately.
• Japan's economy is likely to continue recovering.
• Long-term rates may rise somewhat but what's important is to look at the real interest rate that takes into account inflation expectations.
• Even if long-term rates rise, real interest rates will move in negative territory so monetary conditions will be sufficiently accommodative.
• There is uncertainty on whether Japan will see the positive cycle of wage and inflation, as we predict.
• We will patiently maintain monetary easing to support economic activity.
• We will continue massive bond-buying even under the new operation we decided last week.
• We will conduct nimble market operations when interest rates rise, depending on the level and speed of moves of long-term rates.
• Even if long-term rates come under upward pressure, don't expect the 10-year JGB yield to sharply exceed 1%.
• Under YCC, we need to carefully weigh the effect of the policy in stimulating the economy, and the side effects.

Market reaction: 

The comments reaffirm market bets that the BoJ will stick to its dovish stance, which, along with a generally positive risk tone, undermines the safe-haven Japanese Yen (JPY) and remains supportive of modest intraday gains for the USD/JPY pair. Spot prices currently trade just above mid-149.00s, up over 0.15% for the day, and draw additional support from a modest US Dollar (USD) uptick.