The Governor of the Bank of Japan, Kazuo Ueda, spoke at the press conference held after the October monetary policy meeting.
We will analyze the effect of the Government’s policy on the inflation outlook once it is announced.
We have not revised upward the inflation outlook based on what we call “second forces,” or demand-driven factors.
It is important that currencies move stably reflecting fundamentals.
The possibility of monetary policy lagging remains low.
Much of the revision of CPI forecasts is due to a higher than expected rise in raw material prices.
High volatility in currencies could have a negative impact on the economy.
We work closely with the Government and monitor the currency situation.
We can contain speculative movements in the market with flexible market operations.
We will allow more flexibility when it comes to non-speculative market movements based on fundamentals.
As in July, today’s decision to relax YCC (yield curve control) was partly intended to prevent volatility in financial markets, including currency volatility.
In practice, it would be difficult for BoJ staff to determine whether the daily rise in long-term yields is speculative.
In reality, we may just have to repeat the action of slowing down the increase in performance by analyzing the speed and making a next judgment.
Until we have the inflation target in sight, both the YCC policy and the negative interest rate policy will remain in place.
Source: Fx Street
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