The Bank of Japan (BoJ) board member Goushi Kataoka is on the wires now, via Reuters, making some comments on the Japanese economy and monetary policy outlook.
Key Points:
Chance low for Japan’s economy to see momentum to hit price target heighten under the current framework.
Didn’t see the need to allow long-term yields to move more flexibly when BoJ was cutting price forecasts.
July’s policy move could make BoJ’s long-term yield target obsolete.
BoJ’s new forward guidance only states obvious, see the need for clearer guidance tied to inflation, inflation expectations and the output gap.
Allowing long-term yields to rise when inflation still low could delay the achievement of price target.
Should expand stimulus to quicken achievement of price target, instead of taking steps to continue the easy policy for a prolonged period.
BoJ must take steps to guide super-long JGB yields lower.
Expect global economic expansion to weaken somewhat from next year and onward.
Global trade friction intensifying, could have a big impact on economic activity as well as corporate and investor sentiment.
See downside risks to Japan’s economic outlook in fiscal 2019 due to global uncertainty, expected slowdown in capex.
Must not underestimate the impact of next year’s sales tax hike on Japan’s economy.
Japan’s inflation expectations continue to move on a weak note due in part to BoJ’s weaker commitment to achieve its price target.
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