Bank of Japan (BoJ Governor Kazuo Ueda was out with some comments this Friday, saying that Japan's economy is recovering moderately and is likely to keep recovering moderately.
Key Quotes:
- Capex rising moderately.
- Japan’s' trend inflation is likely to gradually accelerate toward 2% through fiscal 2025.
- Must carefully watch the impact of market moves, including FX, on the economy, and prices.
- Will patiently maintain the easy policy.
- We cannot say yet with conviction our price target will be stably, sustainably met.
- Important to scrutinise whether Japan sees a positive wage-inflation cycle.
- Will take some time but inflationary pressure driven by cost-push factors is likely to dissipate.
- There is still high uncertainty on whether Japan can see a positive wage-inflation cycle.
- The government and BoJ share a view on the desirable direction of the economy, inflation.
- Don't expect the 10-year JGB yield to rise sharply above our 1% reference even if yields come under upward pressure.
- We will consider ending YCC, negative rate if we can expect inflation to stably, and sustainably hit the price target.
- In what order, what part we will change policy will depend on economic, price, and market developments at the time.
Market Reaction:
The Japanese Yen (JPY) reacts little to the dovish remarks, though the prevalent US Dollar (USD) selling bias keeps the USD/JPY pair on the defensive near mid-150.00s through the Asian session on Friday.
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