© . FILE PHOTO: Bank of Japan (BOJ) Governor Haruhiko Kuroda attends a press conference at the BOJ headquarters in Tokyo, Japan, Sept. 21, 2016. REUTERS/Toru Hanai () – The Bank of Japan maintained its massive stimulus on Friday and warned of mounting risks to a fragile economic recovery from the Ukraine crisis, bolstering expectations, it will remain an outlier in the global shift towards tighter monetary policy. The BOJ’s subdued tone stands in stark contrast to the US Federal Reserve and the Bank of England, which raised interest rates this week to prevent soaring inflation from entrenching. As widely expected, the BOJ maintained its short-term interest rate target at -0.1% and its 10-year bond yield around 0% during its two-day policy meeting that ended on Friday. The following are excerpts from the comments made by BOJ Governor Haruhiko Kuroda at his post-meeting press conference, which was held in Japanese, as translated by : IMPACT UKRAINE CRISIS “The biggest impact on the Japanese economy from the crisis in “Ukraine is the rising cost of raw materials. Inflation in Japan is likely to accelerate markedly for the time being, but from a long-term perspective, they are also weighing on the economy by pushing down corporate profits and household real income.” “Developments related to the crisis in Ukraine are very uncertain. We will monitor closely whether they have a negative impact on the Japanese economy, which is still in the midst of recovery from the pandemic.” INFLATION “It will depend on future price movements and the measures taken by the government to cushion the blow. But from April we could see inflation rise around 2% for some time. Rising costs will push inflation up. But it weighs on the “We will patiently maintain our strong monetary easing to achieve sustainable, stable inflation.” WEAK YEN “A weak yen affects the Japanese economy in different ways as the economic and trade structure of the country changes. But in general, nothing changes the way a weak yen is essentially positive for the Japanese economy. It is true that the impact is felt unevenly across sectors, company size and economic entities…” “The recent rise in import costs is driven more by rising commodity costs than by a weak yen.” “The relationship between interest rate differentials and exchange rate movements is not clear… I don’t think interest rate differentials alone would further weaken the yen.” STAGFLATION “I don’t think that Europe, the United States and Japan will have to deal with stagflation” INFLATION AND MONETARY POLICY “There is a chance that Japan will see inflation rise around 2% from April. But most of it is too due to rising commodity prices, so there is no reason to tighten monetary policy. That would be inappropriate. We should adjust monetary policy if inflation expectations or wages see a second-round effect. But Japan is not in such a situation.” JAPANESE ECONOMY “So far the wage negotiations in the spring have produced very positive results. It is difficult to predict how the situation in Ukraine will develop, so that needs to be carefully monitored. But at this stage I do not think that the positive economic cycle has been disrupted.” BOJ RESPONSE TO WEAK YEN “Exchange rate policy falls under the jurisdiction of the Ministry of Finance. The BOJ does not have to, and does not have the power to influence exchange rates. But it is true that exchange rate movements affect the economy and prices, so we pay attention to good on movements.” PRICE INCREASE “Japanese consumer inflation could hover around 2% from April, but it probably won’t last for a long period of time… Price increases driven mainly by cost inflation are essentially temporary and unlikely to last.” INFLATION OUTLOOK JAPAN “Looking at different data, short-term inflation expectations are getting higher, but medium and long-term expectations are barely moving. At least for now, we don’t see a major change in Japan’s inflation expectations.” Disclaimer: Fusion Media would like to remind you that the data on this website is not necessarily real-time or accurate. All CFDs (Stocks, Indices, Futures) and Forex prices are not provided by exchanges but rather by market makers, and therefore prices may not be accurate and may differ from the actual market price meaning prices are indicative and not suitable for trading purposes . Therefore, Fusion Media does not bear any responsibility for any trading losses that you may incur as a result of using this data. Fusion Media or anyone associated with Fusion Media accepts no liability for any loss or damage resulting from reliance on any information, including data, quotes, charts and buy/sell signals on this website. Be fully informed about the risks and costs associated with trading the financial markets, it is one of the riskiest forms of investment possible.
