BoJ Governor Ueda: Believe the economy will go back to positive growth in Q4 and beyond

Because we are foreseeing convergence to 2% of underlying component, we’ve been adjusting the degree of easing slowlyAs Japanese automakers have chosen to lower export prices without passing them to US consumers, that has stabilised the volume of auto exports, not creating large negative effects on employment and production hereThere’s strong enough momentum in domestic price and wage dynamics to prevent negative shocks from having a large impact on inflationAt the moment, not seeing very high risk of inflation, especially underlying inflation accelerating in wake of fiscal stimulusWatching the possibility of food inflation and yen weakness altering inflation expectations carefullyIt’s government job to deliver on medium to long-term fiscal sustainabilityWe do keep an eye on exposure that banks have on non-bank financial institutions outside JapanExchange rates should follow fundamentals How exchange rate changes will affect our inflation outlook is a very important question for usThe bolded comments are the most important ones, in my opinion. I recall the BoJ hiking rates just because of yen depreciation last year, and I think that’s what prompted them to anticipate the rate hike this time as well. Still, it doesn’t feel enough for the market.
This article was written by Giuseppe Dellamotta at investinglive.com.

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