Bank Of Japan’s Funo Speaks Policy

Bank Of Japan's Funo Speaks Policy

Bank Of Japan’s Funo Speaks Policy

The BOJ’s Funo spoke at business event in Japan. His speech included a lot about BOJ’s policy, so let’s take a look at it:

  •          Some people have expressed concern over negative rates
  •          Shouldn’t have a preset idea on where the limit of BOJ’s asset purchases could be
  •          Don’t see a big problem with BOJ becoming a major shareholder for some Japanese firms due to its ETF purchases
  •          BOJ monetary policy so far has had some real effects despite inflation not being at 2%
  •          Effects of current BOJ policy bigger than side-effects
  •          Undesirable for BOJ’s policies to disrupt Japan’s financial transmission


He also added that:

  •          Review will scrutinize what steps are effective in accelerating achievement of 2% price target
  •          Momentary policy is to achieve price target not influence FX moves
  •          MOF has jurisdiction over FX intervention so BOJ buying foreign bonds for purpose of affecting FX rates would be hard

According to Funo, it’s hard to expect that the BANK OF JAPAN will roll-back its policy on the next meeting. He seems to be preparing ground for additional easing, which supported the Nikkei overnight. However, the yen showed no reaction as it’s hard to believe for the market that the central bank will cut rates further. Nevertheless, it seems that not only FED’s meeting will bring a storm before the end of Q3.


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