Monetary Policy press conference 21.12.2017

  • Summary of  prior (Oct) press conference:- Reiterated that domestic economy is expanding moderately; downside risks to prices are larger – To early to discuss exit from easing policy – Far from price target and no need to change YCC – No need to adjust all easing package at once in the future – Upward pressure on wages growing steadily – Abnormal JPY currency (Yen) appreciation that deviates from fundamentals would hurt the econony and accelerate deflation – Central bank policy differences might affect FX if other factors are the same; BOJ took the most appropriate policy to improve both prices and economy – Normalization will occur when price target is achieved, that is what is happening in both the Fed and ECB – Important for govt to maintain faith on fiscal reform; have not given up on primary budget surplus discipline – Japan debt level is very high – No excessive bullish sentiment in equity market at this time.
  • Labour shortage isn’t holding back on economic growth
  • Q&A time , in the meantime JPY holding steady 113.43-EURJPY 134.60
  • Global economy is expected to continue to grow moderately
  • Japan needs to up productivity
  • There has been some improvement in prices
  • Cost pressure on companies increasing
  • Expects pace of price rises to increase in 2018
  • No need to review the YCC now
  • Doesn’t see problem with financial intermediation in Japan
  • My mention of reversal rates did not indicate a change of thinking, no need to change monetary policy for now.  (that’s an official denial enough)
  • Inappropriate for me to comment on the selection of the next BOJ governor.
  • Mon pol since 2013 has created that Japan is no longer in deflation
  • Will persistently continue with easing till the 2% infl tgt is met
  • ETF purchases part of the policy, not aimed at specific prices levels
  • We wont raise rates just because the economy is good
  • Will consider adjusting policy if we consider the momentum wanes

Market doesn’t move. The denial was there. No shocks,JPY should remain on the defensive .



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