BoJ’s Ueda: Accommodative financial conditions are expected to continue for time being

Bank of Japan (BoJ) Governor Kazuo Ueda  said on Wednesday that “based on our current economic and price projections, accommodative financial conditions are expected to continue for time being.”

Additional quotes

Accommodative financial conditions likely to underpin Japan's economy and prices.

If long-term rates rise sharply, we are ready to nimbly conduct bond buying operation.

Positive wage-inflation cycle strengthening, growth in real wages likely to gradually turn positive.

Japan's medium-, long-term inflation expectations and trend inflation still in process of heading toward 2%.

It’s important to support economy, prices with accommodative monetary conditions for time being.

Future monetary policy decisions up to economy, price developments at the time.

We will set short-term rates at appropriate levels at each policy meeting by carefully analysing economic, price outlook and risks.

Our main scenario is for average growth of real wages to turn positive in near term, smaller firms to offer wage hikes bigger than last year.

If economic, price developments worsen sharply, we won't rule out taking any options including deploying tools we have already used.

It may take some time but likelihood of achieving price target is high as current short-term rate level, at 0-0.1%, is very low.

At some point in future, we will like to gradually reduce balance of our JGB holdings.

Market reaction

USD/JPY is attracting fresh buyers on BoJ Governor Ueda’s comments, as it bounces to 151.70, up 0.10% on the day. The pair hit the highest level since 1990 at 151.97 before correcting sharply to 151.63 on Japanese Finance Minister Shunichi Suzuki’s verbal intervention.