EXCERPTS-BOJ Governor Kuroda’s comments at news conference | Reuters

The Bank of Japan on Friday widened the band at which it allows long-term interest rates to move around its target, as part of a raft of measures to make its ultra-easy policy more sustainable amid a prolonged battle to fire up inflation.

Following are excerpts from BOJ Governor Haruhiko Kuroda’s comments at his post-meeting news conference, which was conducted in Japanese, as translated by Reuters: YIELD BAND

“I’m not thinking of widening the band for long-term yields ... We allowed long-term rates to move up and down 0.25% around our target to enhance market functions. But we will ensure any moves won’t diminish the impact our yield curve control policy has in stimulating the economy.”

“If you ask me whether the BOJ could reduce its bond buying in market operations to prevent yields from falling too much, I will say no, we don’t have such a plan.”

“We won’t tolerate yield fluctuations that would have an impact on our monetary easing ... Our new market operation tool will be a powerful weapon for this purpose. We absolutely need to make sure the effect of our monetary easing isn’t hurt. We clarified that stance with our new guidance.”

“I don’t think deputy governor Amamiya and I made conflicting comments ... I see today’s decision as clarifying our stance on how much we tolerate yield fluctuations.” LONG-TERM RATES

“If limited to a certain range, long-term interest rates can fluctuate without diminishing the impact of monetary easing and help enhance market functions. This is what we found out in our review.”

“Our clarification on how much we allow 10-year yields to fluctuate doesn’t have any special relation with our stance that excessive falls in super-long yields are undesirable.”

“At present, we don’t have any plan to take steps to intentionally push up super-long interest rates or steepen the yield curve.” ETF BUYING

“I don’t think our ETF buying has crippled functions in Japan’s stock market.”

“When we ramped up purchases last March, it had a huge positive effect. That’s why we decided to maintain the 12-trillion-yen ceiling, and buy ETFs more flexibly and in a nimble fashion. Removing all numerical targets won’t necessarily allow us to buy flexibly. By having a sufficiently high ceiling, we showed we’re ready to buy massively and boldly.” INCENTIVES TO FINANCIAL INSTITUTIONS

“If we cut rates and deepen negative rates, that could have an impact on financial institutions’ profits. To prevent this from hurting lending, we decided to offer incentives (to financial institutions) with a new scheme. This is aimed at encouraging financial institutions to boost lending.” NEGATIVE RATES

“Some people say the BOJ cannot deepen negative rates because of the side-effects. That’s not true. I don’t think it’s impossible to deepen negative rates.” CURRENCY MOVES

“Exchange-rate moves affect the economy and prices. It’s desirable for currency rates to move in a way that reflect economic fundamentals. I don’t think recent moves deviate from fundamentals.” INFLATION TARGET

“We will maintain our 2% inflation target, and will continue with our powerful easing patiently to achieve it at the earliest date possible. Our steps announced today will make our monetary easing framework more effective and sustainable.” (Reporting by Leika Kihara; Editing by Devika Syamnath)

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