Given the current economic situation, we need to be mindful of chance downside economic risks materialize and affect prices, said the Bank of Japan (BOJ) Deputy Governor Wakatabe on Wednesday.
Key Quotes:
BOJ expects inflation to gradually accelerate.
Downside risks exist over BOJ's economic, price forecasts.
BOJ will carefully examine economic, price moves to check whether mechanism for hitting price goal is working.
BOJ won't hesitate to take additional easing steps if momentum for hitting price goal is lost.
Inflation has yet to reach BOJ's goal, risk of Japan returning to deflation cannot be ruled out.
BOJ expects global economic growth to gradually pick up.
If slowdown in manufacturers' activity persists, that could gradually affect non-manufacturers.
Japan's economy likely to have slowed sharply but slowdown likely temporary.
Eexpect Japan's capital expenditure to continue increasing.
Japan's domestic demand firm as a trend, likely to keep increasing.
FX Implications:
USD/JPY trades near daily lows of 109.37, as markets shrug-off the cautious remarks from the BOJ official. The yen benefits from the drop in the US equity futures and Treasury yields.
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