BoJ Governor Kuroda (post-meeting press conference) says he is not expecting 10yr JGB yields to continue trading with yields above 0.5%, and there is no need to further expand its bond target band; today's decision is not a change in BoJ's monetary policy

ECONOMY:

• Kuroda says the economy is picking up.
• Economy is still on a path towards recovery from the pandemic.
• Sees output gap closing soon and turning positive.
• Government stimulus and BoJ easing will bring Japan's growth rate above its potential.

INFLATION:

• Reiterates that inflation is expected to slow in the latter half of 2023.
• Core CPI is around 3% now, but seen falling to below 2% next year.
• Kuroda says he cannot say the BoJ has reached a stage where prices are expected to grow sustainably and stably.
• Monetary easing since 2013 has made conditions such that there is not deflation.
• Says it is not easy to identify price trends as there are many confounding factors.
• BoJ is not in a situation where it sees 2% price target being achieved sustainably.

WAGES:

• BoJ aims to achieve inflation goal sustainably in tandem with wage growth.
• It is important to support the economy and encourage companies to raise wages.
• Labour crunch is expected to push up wages from now on; sees the rate of wage growth accelerating.
• A path is becoming visible where wages and prices are gradually rising.

MARKET OPERATIONS:

• Says he is not expecting 10yr JGB yields to continue trading with yields above 0.5%, and there is no need to further expand its bond target band
• BoJ will carry out flexible adjustments in market operations by making use of fund-supplying operations against pooled collateral.
• Expects market functions to improve ahead; market functions will improve by conducting nible market operations.
• Says it is still early days since the adjustment to yield bands made in December, BoJ needs more time to assess impact on market functions.
• Says it is unclear whether distortions in yield curve and the improvement in market functions are in place.
• Argues YCC is fully sustainable, widening band has made YCC more sustainable.
• says it will take time for market's yield curve formation under new policy operation to settle.
• Amended rules for funds-supplying operations to encourage yield curve formation consistent with market operation guidelines.
• Amended rules can lower long-term yields without affecting actual demand and supply in bond markets.
• Sees no problems with the BoJ's increased bond purchases, does not see specific risks to the recent increase in bond buying.
• He does not rule out negative rates under the fund-supplying operations.
• Says YCC does not have structural problem; says it is most appropriate to target the 10yr yield.
• Kuroda says will not consider any other option, when asked about targeting shorter maturities. 

RATES AND FOREX:

• Notes real interest rates have been decreasing, enhancing the impact of the BoJ's monetary easing.
• Says it is important for FX rates to move stably, reflecting fundamentals.
• Says he has no specific comments on FX levels, currency policy is the jurisdiction of the government

GUIDANCE:

• Will continue monetary easing to achieve sustainable and stable inflation.
• BoJ will not hesitate to ease monetary policy further if required.
• Today's policy decisions are not a change in the BoJ's monetary policy, like the one in December.
• Says financial market's expectations for a change in policy have been corrected today.
• Says no central bank anywhere tells the market ahead of time what it will do at the next policy meeting.