March 16 The Bank of Japan kept monetary policy
steady on Thursday in the wake of the U.S. Federal Reserve's
second interest rate hike in three months, underscoring the
diverging policy paths of major global central banks.
Following are comments from BOJ Governor Haruhiko Kuroda at
his post-meeting news conference:
"In Japan, trend inflation has been moving sideways. The
momentum for inflation to accelerate to 2 percent remains in
place but lacks strength.
"The BOJ will continue to promote powerful monetary easing
under the yield curve control framework to achieve its price
target at the earliest date possible.
"I don't think U.S. interest rate developments will
immediately have a severe impact on emerging economies. But we
need to watch developments carefully.
"Monetary policy steps affect the economy and prices through
markets and financial institutions' activities, so it's
important to explain in easy terms the thinking behind our
decisions and how we see the economy and prices."
10-YEAR BOND YIELDS
"We need to look at various price indicators as well as
factors that determine underlying trend inflation, such as the
output gap and medium- to long-term inflation expectations.
"We won't immediately change our yield target just because a
particular price indicator reaches a certain level.
"I don't see the need to raise our yield target just because
a central bank of another country raises rates ... Currency
rates move on various factors, not just on interest rate
"As for Japan's economy and prices, downside risks still
exceed upside risks. I don't think we can say that downside
risks subsided significantly.
"If we need to expand stimulus, I won't rule out the chance
of deepening negative interest rates.
"But Japan's economy is recovering moderately. Price growth
remains around zero but is likely to accelerate toward 2
percent, albeit gradually. I don't think we need to think about
(deepening negative rates) now."
ON 10-YEAR BOND YIELD TARGET
"We haven't said we will peg 10-year yields exactly at zero
percent. We're saying we will aim to guide yields around zero
percent, with some room for allowances. Our yield curve control
is functioning smoothly and I expect it to do so in the future.
"Some market participants believe core consumer inflation
will approach 1 percent in the latter half of this year. That
might very well happen. But we won't automatically raise our
yield target just because this happens."
"Not only the G20 but the IMF and OECD have also said from
the past that protectionism damages global trade and global
economic growth, and that it is necessary to maintain free trade
and investment. Japan's stance on this will not change."
(Reporting by Leika Kihara, Stanley White and Tetsushi
Kajimoto; Editing by Chris Gallagher and Kim Coghill)