Japan is absolutely not in a situation that justifies a tightening of monetary policy

Bank of Japan (BOJ) Governor Haruhiko Kuroda explicitly rejects expectations of monetary policy tightening in the coming months.

key quotes

Japan is absolutely not in a situation that justifies a tightening of monetary policy.

Our highest priority is to support the Japanese economy by pursuing strong monetary easing.

Japan does not face a trade-off between economic stability and price stability and can therefore continue to stimulate demand with monetary policy

Wages and prices must increase mutually for Japanese inflation to reach 2% in a stable manner.

The BOJ will be steadfast in its stance of maintaining monetary easing to ensure that the recent rise in inflation expectations leads to a sustained rise in prices.

Recovery of consumption in Japan, capex are lower than in the US economies of the euro zone.

The BOJ needs to cushion the blow of falling real income, driven by rising commodity costs, on households and businesses by maintaining an accommodative monetary policy.

Yen weakness pushes up export and import prices, so its impact on the terms of trade is roughly neutral.

It is important that consumer inflation in Japan reaches 2% on average, not temporarily.

Market reaction

USD/JPY bottoms near 130.20 on dovish comments from BOJ chief Kuroda. The spot is trading at 130.59, down 0.21% on the day.