Following are excerpts from the news conference, which was conducted in Japanese, as translated by Reuters: BOJ GOVERNOR UEDA ON FINANCIAL STABILITY “Achieving financial system stability is a big responsibility for the BOJ. As the environment surrounding Japan’s banking system becomes more severe, it’s extremely important to ensure Japan’s financial intermediation is functioning smoothly.” IMPACT OF THE U.S., EUROPEAN BANKING CRISIS ON JAPAN ECONOMY “I don’t think it will have a big impact on Japan’s economy for the time-being. But we will carefully watch developments.” BOJ’S MONETARY EASING TRAJECTORY”The BOJ’s current monetary easing is a very powerful one. We need to strive, as we have done so far, to appropriately grasp economic, price and financial developments to see whether trend inflation will stably and sustainably achieve 2%. If achievement can be foreseen, we might need to normalise monetary policy. If not, we may need to come up with a more sustainable framework with an eye on the side-effects of monetary easing.” SHOULD THE BOJ TWEAK YIELD CURVE CONTROL SOON?”When looking at current economic, price and financial developments, it’s appropriate to maintain YCC for now.” TO CARRY FORWARD KURODA’S MASSIVE STIMULUS “Yes, we will maintain the previous leadership’s massive stimulus.” BOJ WON’T SEEK TO HIT PRICE GOAL WITHIN SET TIME-FRAME “As in the joint statement, the BOJ will seek to achieve 2% inflation at the earliest date possible. But it isn’t necessarily the case that Japan can achieve the price target regardless of economic conditions. When there’s adverse external shocks, it could become difficult … As such, I don’t think the inflation target can be achieved at a set time-frame.”ON MASSIVE CHANGES TO THE YCC “Whether to make big changes to yield curve control should be decided by looking at economic, price and financial trend. With this in mind, the BOJ must also weigh the benefits and costs of YCC.”TREND INFLATION ON THE RISE”The outcome of this year’s spring wage negotiations is welcome. But it’s necessary to scrutinise whether this move will be sustained … It’s true we’re seeing budding positive signs on inflation. “Trend inflation is rising somewhat. There’s also some positive signs in wages. There’s a good chance this will lead to stable, sustained achievement of higher, trend inflation.” APPROPRIATE TO MAINTAIN NEGATIVE RATES”The BOJ’s negative rates are the foundation of its powerful monetary easing. But there are side-effects, notably the impact on banks. But banks appear to have sufficient buffers and financial intermediation is functioning. The BOJ has also taken various steps to mitigate the cost of negative rates. Given trend inflation has yet to hit 2%, it’s appropriate to maintain negative rates.” REVIEW OF BOJ POLICY FRAMEWORK “From a somewhat long-term perspective, it might be good to do a comprehensive assessment of the BOJ’s powerful monetary easing that has continued for more than 20 years. But that’s something I would like to discuss with the board.”POLICY ADJUSTMENTS”If the BOJ suddenly realises that inflation will stably and sustainably hit 2% and decides to normalise monetary policy, it will have to make very big policy adjustments. That will cause big disruptions in the economy and markets, so it’s important to make pre-emptive and appropriate decisions.” ON JOINT STATEMENT WITH THE GOVERNMENT”I don’t have any idea in mind. Under current economic conditions, there’s no need to change the statement. If economic conditions change sharply, there could be room to discuss (making changes to the statement) with the government.”DEPUTY GOVERNOR HIMINO ON OVERSEAS COUNTERPARTS “Japan’s financial system is stable as a whole, and has sufficient buffers to weather shocks. But we’ve seen hidden vulnerabilities emerge overseas. I hope to engage in close dialogue with financial institutions, and strive to coordinate closely with overseas counterparts.” DEPUTY GOVERNOR UCHIDA ON MONETARY FRAMEWORK “There are views the BOJ’s monetary framework has become complex. But technical aspects-wise, we are able to cope sufficiently. What’s most important is to make accurate judgment on developments and carefully time the most appropriate policy move.” More
