(Reuters) - The Bank of Japan kept monetary policy steady on Thursday, preferring to save its dwindling ammunition as a darkening global growth outlook prompts other major central banks to drop hints of additional stimulus.
But the BOJ stressed anew that global risks were increasing as trade tensions and uncertainty over U.S. economic policies jolt financial markets, signaling that it, too, is leaning more toward ramping up - not whittling down - monetary support.
As widely expected, the BOJ maintained its short-term rate target at -0.1% and a pledge to guide 10-year government bond yields around zero percent.
Following are comments from BOJ Governor Haruhiko Kuroda at his post-meeting news conference:
ON FUTURE MONETARY EASING OPTIONS
“We’ve continued to balance the benefits and costs of our tools in guiding monetary policy, and believe we can keep doing so. This is an approach we’ll take if the momentum for achieving our price target is lost and we would consider additional monetary easing steps.”
“As for monetary easing tools, we can cut our short- and long-term interest rate targets, ramp up asset purchases or accelerate the pace of increase in base money. There is no change to our view to ponder various ideas, including a combination of these steps, depending on what’s most appropriate at the time.”
ON HOW THE FED’S POLICY COULD AFFECT POLICIES OF OTHER CENTRAL BANKS
“It’s true the monetary policies of major central banks could affect the global economy ... If the Japanese economy’s momentum for hitting our price target comes under threat, we will consider easing policy further without hesitation.”
BOJ’S RESPONSE TO POSSIBLE FALL IN 10-YEAR BOND YIELD BELOW AN ACCEPTABLE RANGE
“We don’t want to set too rigid a range on how much yields can move. It’s necessary to allow bond yields to move flexibly to some extent.”
ON WHETHER BOJ DEBATED ADDITIONAL MONETARY EASING AT THURSDAY’S MEETING
“It’s true we discussed global economic developments in depth ... and it’s true we’ve elaborated quite thoroughly on the risks in our policy statement. We’re saying here that we’re mindful that downside risks regarding the global economy are heightening.”
“We will scrutinise such risks in guiding monetary policy ... On the other hand, there’s no change to our baseline scenario that global growth will pick up sometime during the latter half of this year.”
ON WHETHER BOJ COULD EASE POLICY IF GOVERNMENT DEPLOYS MORE FISCAL SPENDING TO MITIGATE PAIN FROM OCTOBER’S SALES TAX HIKE
“The BOJ law does stipulate the government and the central bank must cooperate with each other on policy. But our current yield curve control is a framework under which the BOJ already implicitly cooperates with the government by keeping borrowing costs low.”
ON THE RECENT FLATTENING OF JAPAN’S YIELD CURVE
“We’re vigilant to the fact (that) the yield curve is flattening somewhat. If necessary, we’ll take appropriate action to achieve an appropriate shape of the yield curve.”
ON DOLLAR/YEN MOVES POST-FED
“When you look at how the currency pair moved yesterday and today, we’re seeing a broad dollar fall instead of a yen rise ... But exchange rates move on various factors, so it’s inappropriate to make a judgment just from day-to-day moves.”
“Monetary policy does not target exchange rates. It is conducted to achieve sustainable economic growth with price stability. It’s true exchange-rate moves affect the economy and prices. But we have absolutely no intention of tying monetary policy decisions with exchange-rate moves.”
Reporting by Leika Kihara, Editing by Subhranshu Sahu
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