{"id":20948,"date":"2023-04-24T04:56:24","date_gmt":"2023-04-24T04:56:24","guid":{"rendered":"http:\/\/lynettelockhart.com\/client\/bojs-forecasts-must-be\/"},"modified":"2023-04-24T05:08:35","modified_gmt":"2023-04-24T05:08:35","slug":"boj-chief-wants-quite","status":"publish","type":"post","link":"http:\/\/lynettelockhart.com\/client\/boj-chief-wants-quite\/","title":{"rendered":"BOJ chief wants ‘quite strong’ inflation before tweaking yield control policy"},"content":{"rendered":"

By Leika Kihara<\/p>\n

TOKYO (Reuters) -Bank of Japan Governor Kazuo Ueda said on Monday the central bank’s inflation forecasts must be “quite strong and close to 2%” in the coming year to consider tweaking yield curve control.<\/p>\n

“At present, trend inflation is below 2% so we must maintain monetary easing,” Ueda told parliament. “But when trend inflation is projected to reach 2%, the BOJ must normalise monetary policy,” he added.<\/p>\n

Ueda’s comments come ahead of a two-day BOJ policy meeting that kicks off on Thursday, where the board will produce fresh quarterly growth and inflation forecasts.<\/p>\n

Sources have told Reuters the BOJ is likely to maintain its ultra-easy monetary policy at the first rate review to be chaired by Ueda, who assumed the post in April.<\/p>\n

While companies are passing on rising import costs to consumers more than expected, Japan’s inflation is likely to peak soon and slow back below the BOJ’s 2% target in the latter half of the current fiscal year ending in March 2024, he said.<\/p>\n

“The BOJ’s forecasts of trend inflation for half a year, one year and one-and-a-half years ahead must be quite strong and close to 2%. We also need to judge that the likelihood of the forecasts materialising is high,” Ueda said when asked by an opposition lawmaker to clarify the conditions for tweaking yield curve control.<\/p>\n

Under yield curve control (YCC), the BOJ guides short-term interest rates at -0.1% and the 10-year bond yield around zero with an implicit cap of 0.5%.<\/p>\n

Ueda declined to specify how the BOJ might phase out YCC, saying that would depend on the economy, the pace of inflation and many other factors at the time.<\/p>\n

“At present, I can’t say how this could be done,” Ueda said on the BOJ’s exit strategy.<\/p>\n

But Ueda said he will consider the idea of disclosing in advance the BOJ’s exit strategy from ultra-loose policy, when the right timing to do so arrives.<\/p>\n

“The BOJ has already been conducting many estimates on how a normalisation of monetary policy could affect its finances,” he said.<\/p>\n

How to unload the BOJ’s huge holdings of exchange-traded funds (ETF), accumulated through its heavy asset buying to fire up inflation, will be among key challenges the bank will debate when it considers ending ultra-loose monetary policy, Ueda said.<\/p>\n

(Reporting by Leika KiharaEditing by Shri Navaratnam & Simon Cameron-Moore)<\/p>\n

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By Leika Kihara TOKYO (Reuters) -Bank of Japan Governor Kazuo Ueda said on Monday the central bank’s inflation forecasts must be “quite strong and close to 2%” in the coming year to consider tweaking yield curve control. “At present, trend inflation is below 2% so we must maintain monetary easing,” Ueda told parliament. “But when […]<\/p>\n","protected":false},"author":8,"featured_media":20949,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"spay_email":"","footnotes":""},"categories":[1213],"tags":[1223],"class_list":["post-20948","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-u-s-business","tag-updated"],"jetpack_featured_media_url":"http:\/\/lynettelockhart.com\/client\/wp-content\/uploads\/Reuters_Direct_Media\/USOnlineReportBusinessNews\/tagreuters.com2023binary_LYNXMPEJ3N022-VIEWIMAGE.jpg","_links":{"self":[{"href":"http:\/\/lynettelockhart.com\/client\/wp-json\/wp\/v2\/posts\/20948","targetHints":{"allow":["GET"]}}],"collection":[{"href":"http:\/\/lynettelockhart.com\/client\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/lynettelockhart.com\/client\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/lynettelockhart.com\/client\/wp-json\/wp\/v2\/users\/8"}],"replies":[{"embeddable":true,"href":"http:\/\/lynettelockhart.com\/client\/wp-json\/wp\/v2\/comments?post=20948"}],"version-history":[{"count":3,"href":"http:\/\/lynettelockhart.com\/client\/wp-json\/wp\/v2\/posts\/20948\/revisions"}],"predecessor-version":[{"id":20999,"href":"http:\/\/lynettelockhart.com\/client\/wp-json\/wp\/v2\/posts\/20948\/revisions\/20999"}],"wp:featuredmedia":[{"embeddable":true,"href":"http:\/\/lynettelockhart.com\/client\/wp-json\/wp\/v2\/media\/20949"}],"wp:attachment":[{"href":"http:\/\/lynettelockhart.com\/client\/wp-json\/wp\/v2\/media?parent=20948"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/lynettelockhart.com\/client\/wp-json\/wp\/v2\/categories?post=20948"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/lynettelockhart.com\/client\/wp-json\/wp\/v2\/tags?post=20948"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}