Bank of Japan Governor Ueda says massive stimulus had negative side effects

Bank of Japan Governor Ueda comments crossing again:

  • Negative rate and bother tools under BOJ’s massive stimulus had
    boosted demand by pushing down real interest rates, but had
    side-effects too such as on JGB market function
  • Preliminary wage negotiation outcome tends to be revised down but
    even so, we thought final outcome would be fairly strong number

  • Consumption was showing some weakness but we were able to confirm
    strength in capex, when asked why boj decided to end negative rates
    in March not April
  • We know some small
    firms might struggle to hike wages, but overall, small, midsized
    firms’ profits are improving
  • As we end our
    massive stimulus, we will likely gradually shrink our balance sheet,
    and at some point reduce jgb purchases
  • At present, we have
    no clear idea on timing of reducing JGB buying, scaling back size of
    balance sheet
  • We will take plenty of time examining how to reduce BOJ’s ETF holdings
  • In event of reducing BOJ’s ETF etf holdings, BOJ will come up with
    guidelines taking into account market developments at the time
  • In selling BOJ’s ETF
    holdings, we will do so in a way that minimises losses on BOJ,
    disruptions in markets

Meanwhile, Japan Chief Cabinet Secretary Hayashi:

  • Closely monitoring
    fx moves with urgency
  • Important for currencies to move in stable manner, movement
    reflecting fundamentals

  • Closely watching the impact on Japanese and global economy after the
    Federal Reserve decision

This article was written by Eamonn Sheridan at Source