BoJ’s Adachi: Central bank must maintain accommodative financial conditions until price goal achieved

Source Fxstreet
May 29, 2024 01:53

Bank of Japan (BoJ) board member Seiji Adachi stuck to his dovish rhetoric during his speech on Wednesday.

Key quotes

 Changing monetary policy frequently to stablise FX moves would lead to big changes in rate moves

If interest rate moves are too big, that would cause disruptions in household and corporate investment

Responding to short-term FX moves with monetary policy would affect price stability

If excessive yen falls are prolonged and expected to affect achievement of our price target, responding with monetary policy becomes an option.

It is possible to consider responding with monetary policy if FX moves cause big changes in inflation expectations.

Japan's economy is recovering moderately, although there are some weak signs.

Consumption holding steady as a whole mainly for service spending.

Japan's economy not slumping but not in strong shape either with various uncertainties remaining.

BoJ must maintain accommodative financial conditions until price goal achieved.

We are not yet at stage where we are convinced that there is the sustained achievement of price target, so must maintain accommodative conditions.

We must absolutely avoid raising interest rates prematurely.

If we focus too much on downside risks, inflation may accelerate and might force us to tighten monetary rapidly as a result.

By fixing interest rates at current zero levels until inflation is durably at our price target, we might be forced to hike rates rapidly later and therefore risk hurting economy.

We must look not just at downside but upside risks in guiding monetary policy.

Important to adjust degree of monetary support in several stages, as long as underlying inflation continues to head toward 2%.

At some stage in the future, we will likely reduce our JGB purchases.

Market reaction

USD/JPY defends gains above 157.00 following these dovish comments. The risk-off mood is dragging the pair lower. 

Disclaimer: For information purposes only. Past performance is not indicative of future results.
placeholder
Copper Long-term forecast: Will Copper Price Expected To Soar In 2023?The price of copper is affected by various of factors. You may wonder how the price of cooper will be in 2023, check out our forecast analysis.
Author  Mitrade
The price of copper is affected by various of factors. You may wonder how the price of cooper will be in 2023, check out our forecast analysis.
placeholder
Understanding the first crypto market crash of 2024 and what to expect nextThe 365-day MVRV ratio suggests that this crash may be just the beginning. If the ETF is rejected before the second quarter of 2024, it could trigger a sharp correction.
Author  FXStreet
The 365-day MVRV ratio suggests that this crash may be just the beginning. If the ETF is rejected before the second quarter of 2024, it could trigger a sharp correction.
placeholder
Japanese Yen stands tall near one-month top against USD on hawkish BoJ talksThe Japanese Yen (JPY) rallied to the highest level since early February against its American counterpart on Friday amid bets for an imminent shift in the Bank of Japan's (BoJ) policy stance.
Author  FXStreet
The Japanese Yen (JPY) rallied to the highest level since early February against its American counterpart on Friday amid bets for an imminent shift in the Bank of Japan's (BoJ) policy stance.
placeholder
Natural Gas faces upside pressure as European traders prepare for next heating seasonNatural Gas (XNG/USD) prices are holding ground above $2.00 on Friday after a brief dip earlier this week. Gas prices are quickly recovering as mainland Europe is gearing up for the next heating season, with traders starting to negotiate contracts in
Author  FXStreet
Natural Gas (XNG/USD) prices are holding ground above $2.00 on Friday after a brief dip earlier this week. Gas prices are quickly recovering as mainland Europe is gearing up for the next heating season, with traders starting to negotiate contracts in
placeholder
Bitcoin Price Takes a Plunge: Analyzing the Sudden DropBitcoin price started another decline after it struggled near $64,550. BTC declined below the $63,500 support and might continue to move down.
Author  NewsBTC
Bitcoin price started another decline after it struggled near $64,550. BTC declined below the $63,500 support and might continue to move down.
goTop
quote