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5/10/2017, 7:56 AM (Source: TeleTrader)
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Kuroda: QE stays until inflation holds firmly

The Bank of Japan's focus on long-term government bond yields is appropriate for adapting to changes on a macroeconomic level, Governor Haruhiko Kuroda said on Wednesday. The quantitative easing program would eventually end when consumer prices reach a sustainable growth trend consistent with the target, he added, however he also stressed he doesn't believe the yen would be significantly affected at the switch. Kuroda reiterated the central bank's stance that its bond purchases can be different than in the issued guidance in order to fit the environment in the financial market.

The institution's balance sheet isn't inappropriate, the top policymaker said and stressed there will be no financing of government expenditure nor liabilities. However, he signaled rate-setters may start communicating the estimates of the effects of an eventual unwinding of the holdings. Turning to inflation, Kuroda said he believes the weakening of the yen will underpin prices in the current fiscal year, though that the effect has a time lag. He also cited the expectations for a further increase in rates of interest in the United States.

Economic growth has picked up at a firmer pace due to tailwinds from overseas factors, according to the BoJ chief, who stated potential jitters on a global scale can still impact domestic sentiment. In his view, the favorable situation in the labor market isn't reflected in pay rises, which remain moderate.

Breaking the News / IT