BoJ Ueda says expect rates to stay low even after recent policy shift

• Japan’s economy showing some weakness, but recovering moderately
• Chance of solid wage growth this year heightening
• Inflation likely to exceed 2% this fiscal year, slow thereafter
• Must watch fx, market developments and their impact on economy, prices
• Trend inflation likely to gradually accelerate towards end of current forecast period under quarterly report
• BoJ will guide policy appropriately with eye on economy, price developments with short-term rate as policy target
• BoJ expects accommodative monetary conditions to continue for time being
• Expects consumption to increase gradually as wage gains push up household income
• Temporary factors that are weighing on consumption likely to dissipate
• Important to maintain accommodative monetary conditions as trend inflation yet to hit 2%
• If economy, price developments proceed as we project now, we need to think about reducing degree of monetary support
• Whether this will happen will depend on upcoming data
• Have no preset idea now on how and when we will adjust interest rate levels
• Even after march policy shift, expect interest rates to stay low, real interest rates to remain at deeply negative territory
• Expect to reduce our bond buying in future but can’t say now when and by how much
• Won’t immediately start unloading BOJ’s ETF holdings

This article was written by Arno V Venter at www.forexlive.com.