BoJ’s Uchida: We have overcome the zero lower bound

Dhwani Mehta FXStreet

Bank of Japan (BoJ) Deputy Governor Shinichi Uchida said on Monday that “we have overcome the zero lower bound.”

Additional quotes

We still have a big challenge to anchor the inflation expectations to 2%, the end of our battle is in sight.

This time is different.

We have overcome the zero lower bound.

We returned to a conventional monetary policy framework, aiming at a 2% price stabilitytarget through adjustments of the short-term policy rate, which means we have overcome thezero lower bound.

Labor market conditions have changed structurally and irreversibly.

Not so clear if Japan has overcome deflationary norm.

The main driving force for these developments and long-waited structural changes is labor shortages.

Higher menu costs, together with mild inflation, have slowed the pace of price adjustment.

And for us, the central bank, this requires more effort to get out of this situation.

Market reaction

At the time of writing, USD/JPY is losing 0.15% on the day to trade at 156.75.

Author

Dhwani Mehta

FXStreet

Residing in Mumbai (India), Dhwani is a Senior Analyst and Manager of the Asian session at FXStreet. She has over 10 years of experience in analyzing and covering the global financial markets, with specialization in Forex and commodities markets.

Markets move fast. We move first.

Orange Juice Newsletter brings you expert driven insights - not headlines. Every day on your inbox.

Editor's Picks

EUR/USD drops to daily lows near 1.1630

EUR/USD now loses some traction and slips back to the area of daily lows around 1.1630 on the back of a mild bounce in the US Dollar. Fresh US data, including the September PCE inflation numbers and the latest read on December consumer sentiment, didn’t really move the needle, so the pair is still on course to finish the week with a respectable gain.

GBP/USD trims gains, recedes toward 1.3320

GBP/USD is struggling to keep its daily advance, coming under fresh pressure and retreating to the 1.3320 zone following a mild bullish attempt in the Greenback. Even though US consumer sentiment surprised to the upside, the US Dollar isn’t getting much love, as traders are far more interested in what the Fed will say next week.

Gold makes a U-turn, back to $4,200

Gold is now losing the grip and receding to the key $4,200 region per troy ounce following some signs of life in the Greenback and a marked bounce in US Treasury yields across the board. The positive outlook for the precious metal, however, remains underpinned by steady bets for extra easing by the Fed.