TOKYO (Reuters) - Japan’s exports rose in August and its central bank kept its view the economy was expanding modestly, but policy makers and analysts warned of risks to the outlook from a U.S.-led trade war that some fear could chill global investment and growth.
Following are comments from BOJ Governor Haruhiko Kuroda at his post-meeting news conference:
ON BOND MARKET MOVES SINCE BOJ’S JULY DECISION TO MAKE ITS POLICY FRAMEWORK MORE FLEXIBLE
“Bond market trading activity has heightened somewhat... But trading tends to thin in August of each year, so it’s too early to gauge the impact of our July decision.”
ON POTENTIAL DEMERITS OF BOJ’S EASY POLICY
“Bank lending remains strong and this is underpinning Japan’s moderate economic expansion. Japanese banks have sufficient buffers to endure a shock of the scale of the Lehman crisis. Japan’s financial system is maintaining stability as a whole. On the other hand, it’s true prolonged monetary easing is weighing on banks’ profits. We need to scrutinise whether banks could become more hesitant of lending.”
“We must maintain our powerful monetary easing given it will take time to achieve our inflation target.”
ON PREMIER SHINZO ABE’S COMMENTS THAT BOJ SHOULD NOT CONTINUE WITH UNCONVENTIONAL EASING FOREVER
“We won’t be continuing our current unconventional policy if 2 percent inflation is met.”
ON U.S.-CHINA TRADE FRICTION
“Protectionism could affect not only the countries that are engaged (in trade wars) but the global economy as a whole through supply chains. We’re watching developments with grave concern.”
“It’s hard to say what specific impact this could have, as there has been no specific impact seen on trade. But there could be wide-ranging effects, given the complex global supply chain in the world economy.”
ON BOJ’S FUTURE EXIT FROM EASY POLICY
“If we achieve our 2 percent inflation target, there’s no need to continue with our massive monetary easing, so we’ll obviously head toward an exit. But that doesn’t mean we should not continue monetary easing now...
“Regardless of whether it’s unconventional or conventional monetary easing, central banks always watch how the steps affect the economy, prices and financial developments.”
“We are maintaining our monetary easing taking into account the impact on the financial system. We’re also keeping a close eye on problems that could emerge from our ETF and government bond buying. But that doesn’t mean we should stop monetary easing now.”
“No central bank wants to tighten or ease policy indefinitely. Any central bank obviously would want to achieve its target as soon as possible and normalize policy.”
“The Fed is normalizing policy, while the ECB and the BOJ are continuing unconventional easing. I don’t think central banks have run out of policy tools or have no policy means left. When you look at the innovation central banks went through after the Lehman crisis, I don’t see the point of concluding that (central banks have reached) the limits.”
Reporting by Leika Kihara; Editing by Subhranshu Sahu
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