* BOJ's Kuroda surprised with hawkish tone in first live
* Stronger tone aimed at correcting expectations of further
* Central bank's policy and yen outlook unchanged
By Tetsushi Kajimoto and Izumi Nakagawa
TOKYO, April 10 Japan's central bank governor,
Haruhiko Kuroda, gave the yen its biggest boost in over seven
months and sent Tokyo stocks tumbling with hawkish comments this
week, but his aim was more to jolt market psychology than to
signal a change in policy.
Kuroda seized the opportunity to speak directly to financial
markets on Tuesday, when the Bank of Japan (BOJ) introduced live
news conferences, reinforcing his core message that the recovery
in the world's third-biggest economy was steadily banishing 15
years of deflation.
Nearly a year after unleashing an unprecedented burst of
asset purchases - printing money to buy government bonds and
forcing long-term bond yields lower - Kuroda has been
consistently bullish about achieving his 2 percent annual
But with entrenched expectations that the BOJ would take
further easing measures in the next few months, he spoke more
forcefully than before - and was heard in real time.
Previously, his media briefings after BOJ decisions were not
broadcast live. Instead, reporters were prevented from
publishing his remarks until the briefing ended, when summary
headlines would spill out on traders' screens in a single
Tuesday's hour-long, live presentation featured some
unusually strong language, and it hit its mark.
"I guess Governor Kuroda always appears to be brimming with
self-confidence, but for people seeing him for the first time,
this must have been vivid," said Izuru Kato, chief economist at
Totan Research. "He was so confident, he may have seemed
Most of about a dozen economists and market participants
interviewed after Kuroda's performance said their forecasts had
not changed but that the bookish central banker's bullishness
may have pushed back market expectations of further stimulus.
Most also said the yen's pop was likely the result of short
positions - investors betting that the Japanese currency would
fall - getting squeezed, rather than a new uptrend for the yen,
which has dropped sharply during Kuroda's year of easy money.
The U.S. dollar fell more than 1 percent against the yen on
Tuesday after Kuroda's remarks, accelerating its decline in
overseas trade to 101.55 yen, its lowest level since
March 19. The Tokyo stock market, already closed for the day
when Kuroda spoke, tumbled 2.1 percent on Wednesday.
Kuroda chose his live debut to tell investors, in unusually
strong language, that "Japan is making steady progress towards 2
percent inflation. I don't think there is a need to take
additional measures now."
He added: "As always, I remain convinced about the prospect
for achieving our price target."
He stressed that the economy would recover briskly from a
national sales tax implemented last week, that Japan's labour
markets were tight and that growth had almost caught up with its
potential. He even went so far as to say that the BOJ could
adjust policy in either direction.
And yet, while this all surprised some investors, prominent
BOJ watchers saw a change only in delivery.
"His stance hasn't changed but he conveyed his intention to
change market expectations of additional easing - to correct the
headlong expectations for easing," said Hideo Kumano, chief
economist at Dai-ichi Life Research Institute.
To be sure, not everyone was impressed.
"It gave the market a message that he had no choice but to
read a draft that his staffers prepared for him, which is an
image of the old BOJ culture," said Kyoya Okazawa, head of
global equities at BNP Paribas, who called the presentation
As it has done every meeting since last April's easing, the
BOJ kept its commitment to increase base money, its key policy
gauge, at an annual pace of 60-70 trillion yen ($580-$680
A Reuters poll last month showed analysts expect the BOJ to
ease again by July on doubts that core consumer inflation, which
rose an annual 1.3 percent in February, will accelerate further,
let alone reach the BOJ's 2 percent target. Recent data has been
soft, and the economy has slowed sharply in recent quarters.
The message now seems to be sinking in that it will take
something serious for Kuroda to change policy.
The BOJ's new, more open style is the result of years of
consideration, and officials bill it as the adoption of what is
now considered best practice in central banking communication,
aligning the Japanese bank's approach with peers such as the
U.S. Federal Reserve and the European Central Bank.
The market impact of Kuroda's comments, however, shows he
now faces the same challenge as other central bank heads,
including Janet Yellen at the U.S. Federal Reserve - not to be
misunderstood by the market.
(Additional reporting by Yoshiko Mori, Lisa Twaronite, Ayai
Tomisawa and Shinichi Saoshiro; Writing by William Mallard;
Editing by Nachum Kaplan and Mark Bendeich)