BoJ’s Kuroda: Long way to go before reaching inflation target

Key quotes from the speech by BoJ Governor Kuroda titled "Quantitative and Qualitative Monetary Easing and Economic Theory" at the University of Zurich in Switzerland.

Long way to go before reaching inflation target.

Economic theory points to two possible causes of the prolonged deflation. The first is a decline in the natural rate of interest, while the second is a decline in inflation expectations.

During the deflationary phase in Japan, both the natural rate of interest and inflation expectations seem to have declined.

In order to overcome deflation, real interest rates need to be well below the natural rate of interest, whose key determinant is the potential growth rate.

Going forward, with the output gap improving steadily, firms' stance is likely to gradually shift toward raising wages and prices.

If further price rises come to be widespread, inflation expectations are likely to rise steadily.

The Bank will continue to persist with powerful monetary easing to ensure that such positive developments are not cut short.

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these securities. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Forex involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility.