BoJ Governor Ueda's Press Conference: showed JGB buying plans through March 2027, to allow flexibility and predictability

JGBs/Taper

• JGB buying plans through March 2027, to allow flexibility and predictability.


• Will respond nimbly in the case of rapid rise in long-term interest rates, such as by increasing bond buying, conducting fixed-rate bond purchase operations and/or using fund-supply operations against pooled collateral.


• Considered the view of market participants.


• Too quick tapering of bonds could result in unexpected effects in the market.


• Tapering decision was not so much about fiscal considerations, more about avoiding the negative impact of excessive volatility.


• Tapering is a preventative measure against uncertainties in the market.


• Tapering decision was based on market movements across April and May.


• Do not see much negative impact of reducing tapering on the economy.


• On the JPY 200bln tapering adjustment, this was so they could proceed with a little more caution. Tapering decision removes uncertainty for the government regarding issuance planning.


• Maintained close communication with the MOF (Reminder: the MOF is meeting primary dealers on June 20th)


• Tapering should not be used as a monetary policy tool.


• Conintuing at a pace of JPY 400bln bond tapering would have had merits when it comes to predictability but decided that reducing it would help stabilise markets. 

Interest Rates

• Will continue to hike, if the economy and prices improve.


• Will be guided from the viewpoint of sustainably and stably meeting the price target.


• A further hike is dependent on the likelihood of attaining the BoJ's outlook. Timing of such a move is dependent on the certainty of the outlook.


• Not appropriate to comment on near-term hike possibilities.


• Rate hike decision would need to be based on lots of data and considerations.

Economy

• Recovering moderately, some weak moves are seen.


• Growth is likely to moderate, as trade polices lead to a slowdown in overseas economies and a drop in corporate profits. Thereafter, expect the growth rate to rise.


• No big change to the overall picture of Japan's economy or prices since the last MPM.


• Aware that rising food prices are impacting households, potential upside and downside risks to prices. Mindful of the impact on inflation expectations, need to be aware of secondary impact from cost-push factors.


• Judged that downside risks are bigger for the economy and prices.


• Important more than ever to analyse a variety of data.


• Growing view that pessimistic data would come out in H2-2025.


• Food prices and the Middle East conflict, if those factors continue, could have a secondary impact on trend inflation.


• Inflation expectations are still not anchored to 2% in Japan.


• Wants to see business sentiment and capex plans from the July Tankan survey. Hard to tell when the wage impact from deteriorating corporate profits will be seen.


• Underlying inflation not increasing in an accelerated way. Not behind the curve.


• Increasing food prices could impact underlying inflation via wages or making price hikes easier.

Trade

• How this develops, and then how the economy reacts, is very uncertain. Must be attentive.


• Expects the impact of trade policies to become more evident.


• Unable to ignore risks on trade policies reversing wage-setting behaviour among firms, particularly manufacturers.


• Positive developments seen between China and US.

ETF/REIT

• No change to holdings.


• Considering what to do with REIT holdings, just like ETFs

Fiscal Policy

• Cash handouts could temporarily soften the negative impact of inflation on private consumption.


• Would want to see how any handout would impact underlying inflation. Expects a handout to offset consumption weakness.

Market Reaction/Yields 

• Ueda did not see yields move in a unilateral direction because of the tapering decision.


• Possible to control long-term yields in some cases. But, no definitive answer on this.


• 
  Will not rule out any tools. When questioned on YCC
  

Reaction details (07:47)

• 07:43BST: Ueda remarked that they judged the downside risks are bigger for the economy and prices, a comment which hit the JPY, lifting USD/JPY from 144.64 to 144.84 over the course of three minutes.


• Continuation of the move around 10-minutes later as Ueda said that inflation expectations are still not anchored to 2% in Japan and he expects the impact of trade policies to become more evident.

17 Jun 2025 - 07:33- MetalsImportant- Source: Newswires