Jan 21 (Reuters) - The Bank of Japan kept monetary policy steady and nudged up its economic growth forecasts on Tuesday, as the government’s stimulus package and receding pessimism over the global outlook took some pressure off the central bank to top up stimulus.
The BOJ also signalled cautious optimism over the global economy after the United States and China agreed on a preliminary deal to defuse their bitter trade war, saying that risks surrounding the outlook have “subsided somewhat.”
Following are comments from BOJ Governor Haruhiko Kuroda at his post-meeting news conference: RISK APPETITE “Progress in U.S.-China trade talks and Brexit have led to an improvement in risk sentiment, pushing up stock prices and long-term rates in many countries. But uncertainty remains on the fate of U.S.-China trade talks. There are also geopolitical risks in the Middle East.
“While risks surrounding global growth have subsided somewhat, they remain large.”
INFLATION TARGET “It’s true the BOJ must be mindful of the impact prolonged ultra-low rates could have on financial intermediation. But the benefits of our policy still exceed the costs. The BOJ will continue to pursue powerful monetary easing to achieve 2% inflation.”
ON IMPACT OF SALES TAX HIKE “Non-durable goods sales are firm ... Consumption remains in good shape. I don’t think consumption is in a downtrend.”
ON WHETHER RECEDING GLOBAL RISKS COULD ALLOW THE BOJ TO MODIFY ITS FORWARD GUIDANCE ON INTEREST RATES “If the economy accelerates dramatically, there could be some debate. But for now, it’s appropriate to maintain our current policy stance. Various overseas risks remain, so the current monetary policy with an easy bias will be sustained for some time.”
ON WHETHER 10-YEAR BOND YIELDS OUGHT TO BE IN POSITIVE TERRITORY, AND WHETHER SUPER-LONG YIELDS OUGHT TO RISE FURTHER “I don’t see any problem with 10-year bond yields fluctuating around 0% ... As for super-long bond yields, I won’t be surprised if they rose a bit further.”
ASKED WHETHER THE BOJ, LIKE THE ECB AND THE FED, COULD CONDUCT A COMPREHENSIVE REVIEW OF ITS POLICY FRAMEWORK “In Japan, inflation is unfortunately distant from our 2% target. Japan’s real economic growth is at appropriate levels, the job market is very tight. But wage and price growth is slow. It’s premature to change our monetary policy framework, or start debate on it.” (Reporting by Leika Kihara, Daniel Leussink, Tetsushi Kajimoto; Editing by Subhranshu Sahu)