The Bank of Japan on Thursday doubled down on its commitment to maintain its massive stimulus programme and a pledge to keep interest rates ultra-low, triggering a fresh sell-off in the yen and sending government bonds rallying.
Reinforcing its resolve to support a fragile economy even as sharp rises in raw material costs push up inflation, the BOJ also said it will offer to buy unlimited amounts of 10-year government bonds to defend an implicit 0.25 per cent cap around its zero target every market day. The BOJ's commitment to its zero-rate programme puts it at odds with major economies that are shifting towards tighter monetary policy, although inflation in Japan is expected to creep up towards the central bank's 2 per cent target.
Following are excerpts from BOJ Governor Haruhiko Kuroda's comments at his post-meeting news conference, which was conducted in Japanese, as translated by Reuters:"It's desirable for currencies to move stably in a way that reflects economic fundamentals. The kind of rapid moves seen in a short period of time heightens uncertainty for companies and makes it difficult for them to set business plans.
"We haven't changed our view that a weak yen is positive for Japan's economy as a whole. But it's also true that excessive currency volatility would heighten uncertainty for companies ... and would be unfavourable for the economy.""When excluding energy and volatile food prices, consumer inflation will likely gradually accelerate and hit 1.5 per cent in fiscal 2024. But that's still below our 2 per cent target.
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