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

Haresh Menghani FXStreet

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.

Author

Haresh Menghani

FXStreet

Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.

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