TOKYO May 21 The Bank of Japan kept monetary
policy steady and raised its assessment on capital expenditure
on Wednesday, reassured by growing evidence the economy can
withstand the pain from a sales tax hike without additional
Following are comments from BOJ Governor Haruhiko Kuroda at
his post-meeting news conference:
"Our quantitative easing policy is exerting its intended
effect. The Bank of Japan will continue with this policy until
the 2 percent target is achieved in a sustained manner."
"Japan's economy is recovering moderately but is halfway to
its 2 percent price target, so the Bank of Japan will continue
its QQE policy."
"With regard to the connection to monetary policy, we are
not thinking about policy in terms of a linkage to the foreign
exchange or stock market. Basically, as with many other central
banks, we have set a price stability target and are making
efforts to achieve it."
"We won't guide monetary policy for the purpose of
influencing currency rates ... We won't guide monetary policy
based on what other central banks do."
"On the other hand, the U.S. economy is doing pretty well
and so monetary policy is in the phase of tapering. When you
take into account such domestic and external economic
developments, as well as market moves, there is no reason why
the yen should strengthen."
"I don't think liquidity in the JGB market is falling
sharply, or that transactions aren't going smoothly, or that
pricing isn't conducted appropriately."
"Long-term interest rates are affected by various factors,
including the BOJ's JGB buying, changes in market participants'
inflation expectations and overseas long-term rate moves. I
shouldn't comment now specifically on how bond yields will move
in the future.
"If I say too much on that subject, that can be interpreted
as offering forward guidance on interest rates."
"Most of the wage negotiations have concluded, which shows
that not only big firms but smaller firms are raising wages
including regular pay. Improvements in job market conditions are
"There's no change to our view, shown in the twice-yearly
outlook report, that the impact of the tax hike will diminish
around summer onward."
"The potential growth rate isn't fixed and fluctuates on
various factors. For instance, it can be increased through
policy efforts. We shouldn't consider it as something fixed."
"When we reach the 2 percent price stability target our
economy should be in a positive cycle with regard to
productivity and income and experiencing balanced growth,
including wage growth. That's desirable and in order to achieve
that we are continuing our policy of quantitative easing and
looking to break the deflationary psychology.
"We're currently seeing a tightening of the labour market
and a more certain pressure toward higher wages and improved
corporate profitability. I think that's evidence of the positive
cycle at work but for the purpose of raising growth over the
medium- and long-term we need to see three things.
"First, we need to see companies positive about new
investment. Second, we need to see more women and older people
in the work force, along with foreign workers who have special
talents to strengthen the work force. Third, we need to see
government reforms to raise productivity in the economy."
(Reporting by Leika Kihara, Stanley White and Tetsushi
Kajimoto; Editing by Chris Gallagher)