Sept 21 (Reuters) - The Bank of Japan kept monetary policy steady on Thursday and maintained its upbeat view of the economy, signalling its conviction a solid recovery will gradually accelerate inflation towards its 2 percent goal without additional stimulus.
Following are comments from BOJ Governor Haruhiko Kuroda at his post-meeting news conference:
“The key to the debate on an exit strategy (from easy monetary policy) is what to do with the central bank’s expanded balance sheet, and when and how to raise short-term interest rates ... But how such steps could affect the BOJ’s financial health and banking sector profits would change depending on economic and financial developments at the time.
“That’s why it is hard to show a specific (exit strategy) now.”
“The BOJ will patiently continue accomodative monetary policy to achieve 2 percent inflation. As we mention in our policy statement, we will also adjust policy as needed looking at economic, price and financial developments. As such, we will take further monetary easing steps if necessary.”
“In Japan, we are implementing yield curve control. Just because U.S. interest rates rise, that doesn’t mean Japanese rates must rise too.
“The BOJ will guide policy to create an appropriate yield curve, while looking at economic, price and financial developments ... I won’t comment on the impact on currency and stock markets.”
“Our ETF buying is aimed solely at affecting risk premium, not at influencing stock prices ... We won’t change the pace of our ETF buying just because stock prices are moving up or down.”
“Of course the most important aspect of our current policy framework is yield curve control. I won’t say that our ETF buying has an equally important role. But we think ETF buying is an important step in achieving our inflation target at the earliest date possible.
“Our price target is an important tool to achieve price stability, which is our mandate under the BOJ law. I think it’s inappropriate to alter or abandon our 2 percent inflation target.”
“The BOJ will take into account economic, price and financial conditions, and guide policy so that the momentum toward achieving 2 percent inflation is sustained ... But we’re carefully watching progress on fiscal discipline as it would affect not just fiscal policy but monetary policy.
“Fiscal discipline could affect market trust in Japanese government bonds. Theoretically, there’s a risk interest rates may rise if confidence in the JGB market is eroded.”
ON DIVERGING PATHS OF FED, ECB and BOJ:
“Japan’s economy is recovering, as is the case of Europe and the United States. But in Japan, inflation expectations aren’t anchored around the BOJ’s price target ... U.S. and European inflation expectations are anchored around their central banks’ price targets. That’s especially true in the United States, which is why the Fed is normalising policy.
“As for Japan, inflation is still distant from the BOJ’s target. It’s natural for monetary policy to differ country by country. There’s nothing wrong with it.”
Reporting by Leika Kihara, Stanley White and Tetsushi Kajimoto; Compiled by Shri Navaratnam